Trade-Ideas: Allied Nevada Gold (ANV) Is Today's Weak On High Relative Volume Stock

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 Allied Nevada Gold ( ANV) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Allied Nevada Gold as such a stock due to the following factors:

  • ANV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.5 million.
  • ANV has traded 885,747 shares today.
  • ANV is trading at 2.24 times the normal volume for the stock at this time of day.
  • ANV is trading at a new low 11.22% 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 ANV:

Allied Nevada Gold Corp., a gold producer, is engaged in the mining, development, and exploration of properties in Nevada. The company's principal products comprise unrefined gold and silver bars. Currently there are no analysts that rate Allied Nevada Gold a buy, 3 analysts rate it a sell, and 1 rates it a hold.

The average volume for Allied Nevada Gold has been 4.2 million shares per day over the past 30 days. Allied Nevada has a market cap of $173.4 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.02 and a short float of 42.7% with 11.26 days to cover. Shares are down 53.2% year-to-date as of the close of trading on Wednesday.

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 Allied Nevada Gold as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • ALLIED NEVADA GOLD CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ALLIED NEVADA GOLD CORP reported lower earnings of $0.01 versus $0.52 in the prior year. For the next year, the market is expecting a contraction of 3100.0% in earnings (-$0.30 versus $0.01).
  • 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 Metals & Mining industry. The net income has significantly decreased by 1355.6% when compared to the same quarter one year ago, falling from $4.97 million to -$62.41 million.
  • ANV's debt-to-equity ratio of 0.75 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.06 is very low and demonstrates very weak liquidity.
  • 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. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, ALLIED NEVADA GOLD CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 49.04%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1300.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

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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