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

  • RSO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.6 million.
  • RSO has traded 287,498 shares today.
  • RSO is trading at 4.80 times the normal volume for the stock at this time of day.
  • RSO is trading at a new low 3.18% 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 RSO:

Resource Capital Corp., a diversified real estate investment trust, primarily focuses on originating, holding, and managing commercial mortgage loans and other commercial real estate-related debt and equity investments in the United States. The stock currently has a dividend yield of 15.8%. RSO has a PE ratio of 18.1. Currently there is 1 analyst that rates Resource Capital a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Resource Capital has been 794,900 shares per day over the past 30 days. Resource has a market cap of $669.5 million and is part of the financial sector and real estate industry. The stock has a beta of 0.77 and a short float of 2.6% with 3.51 days to cover. Shares are down 0.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Resource Capital as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 13.7%. Since the same quarter one year prior, revenues rose by 30.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 46.6% when compared to the same quarter one year ago, falling from $24.12 million to $12.87 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, RESOURCE CAPITAL CORP underperformed against that of the industry average and is significantly less than 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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