Weak On High Volume: Knightsbridge Shipping (VLCCF)

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

  • VLCCF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.6 million.
  • VLCCF has traded 244,480 shares today.
  • VLCCF is trading at 3.70 times the normal volume for the stock at this time of day.
  • VLCCF is trading at a new low 10.02% 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 VLCCF:

Knightsbridge Shipping Limited, a shipping company, engages in the seaborne transportation of dry bulk cargoes worldwide. As of October 7, 2014, it owned and operated a fleet of 27 Capesize dry bulk carriers. The stock currently has a dividend yield of 4.8%. VLCCF has a PE ratio of 29.6. Currently there are 2 analysts that rate Knightsbridge Shipping a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Knightsbridge Shipping has been 969,600 shares per day over the past 30 days. Knightsbridge Shipping has a market cap of $332.5 million and is part of the services sector and transportation industry. The stock has a beta of 1.81 and a short float of 19.8% with 6.41 days to cover. Shares are up 21.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Knightsbridge Shipping as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:
  • VLCCF's very impressive revenue growth greatly exceeded the industry average of 25.0%. Since the same quarter one year prior, revenues leaped by 94.3%. 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 current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels.
  • 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 Marine industry. The net income has significantly decreased by 711.8% when compared to the same quarter one year ago, falling from $1.01 million to -$6.17 million.
  • The gross profit margin for KNIGHTSBRIDGE SHIPPING LTD is currently extremely low, coming in at 7.66%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -31.89% is significantly below that of the industry average.

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