Weak On High Volume: Sociedad Quimica Y Minera De Chile (SQM)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Sociedad Quimica Y Minera De Chile ( SQM) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Sociedad Quimica Y Minera De Chile as such a stock due to the following factors:

  • SQM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $10.9 million.
  • SQM has traded 64,381 shares today.
  • SQM is trading at 4.20 times the normal volume for the stock at this time of day.
  • SQM is trading at a new low 4.11% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on SQM:

Chemical and Mining Company of Chile Inc. is engaged in the production and distribution of specialty plant nutrients, iodine and its derivatives, lithium and its derivatives, potassium chloride and potassium sulfate, industrial chemicals, and other commodity fertilizers. The stock currently has a dividend yield of 5%. SQM has a PE ratio of 15.6. Currently there are no analysts that rate Sociedad Quimica Y Minera De Chile a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Sociedad Quimica Y Minera De Chile has been 349,200 shares per day over the past 30 days. Sociedad Quimica Y Minera De Chile has a market cap of $7.3 billion and is part of the basic materials sector and chemicals industry. Shares are up 8% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sociedad Quimica Y Minera De Chile as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, SQM has a quick ratio of 2.19, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 44.57% is the gross profit margin for SOC QUIMICA Y MINERA DE CHI which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.21% is above that of the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Chemicals industry. The net income has significantly decreased by 52.3% when compared to the same quarter one year ago, falling from $138.91 million to $66.30 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Chemicals industry and the overall market, SOC QUIMICA Y MINERA DE CHI's return on equity is significantly below that of the industry average and is below that of the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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