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 Packaging Corp of America ( PKG) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Packaging Corp of America as such a stock due to the following factors:

  • PKG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $63.2 million.
  • PKG has traded 856,768 shares today.
  • PKG is trading at 23.18 times the normal volume for the stock at this time of day.
  • PKG is trading at a new low 10.00% 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 PKG:

Packaging Corporation of America manufactures and sells containerboard and corrugated packaging products in the United States, Mexico, Canada, and Europe. The company operates through three segments: Packaging, Paper, and Corporate and Other. The stock currently has a dividend yield of 2%. PKG has a PE ratio of 15.2. Currently there are 4 analysts that rate Packaging Corp of America a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Packaging Corp of America has been 751,700 shares per day over the past 30 days. Packaging Corp of America has a market cap of $7.9 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.43 and a short float of 1.6% with 1.59 days to cover. Shares are up 4.5% year-to-date as of the close of trading on Monday.

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 Packaging Corp of America as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • PKG's very impressive revenue growth greatly exceeded the industry average of 9.6%. Since the same quarter one year prior, revenues leaped by 79.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • PACKAGING CORP OF AMERICA has improved earnings per share by 21.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PACKAGING CORP OF AMERICA increased its bottom line by earning $4.52 versus $1.68 in the prior year. This year, the market expects an improvement in earnings ($4.67 versus $4.52).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Containers & Packaging industry average. The net income increased by 23.3% when compared to the same quarter one year prior, going from $84.68 million to $104.45 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Containers & Packaging industry and the overall market, PACKAGING CORP OF AMERICA's return on equity exceeds that of the industry average and significantly exceeds 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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