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

  • FMER has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.9 million.
  • FMER has traded 103,579 shares today.
  • FMER is trading at 2.65 times the normal volume for the stock at this time of day.
  • FMER is trading at a new low 3.01% 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 FMER:

FirstMerit Corporation operates as a bank holding company for FirstMerit Bank, N.A. that provides various banking, fiduciary, financial, insurance, and investment services to corporate, institutional, and individual customers. The stock currently has a dividend yield of 3.6%. FMER has a PE ratio of 12.6. Currently there are 3 analysts that rate Firstmerit a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Firstmerit has been 1.0 million shares per day over the past 30 days. Firstmerit has a market cap of $2.9 billion and is part of the financial sector and banking industry. The stock has a beta of 1.16 and a short float of 5.2% with 6.42 days to cover. Shares are down 8.4% year-to-date as of the close of trading on Tuesday.

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 Firstmerit as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, good cash flow from operations, growth in earnings per share, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 56.9% when compared to the same quarter one year prior, rising from $40.71 million to $63.90 million.
  • Net operating cash flow has significantly increased by 99.70% to $85.11 million when compared to the same quarter last year. In addition, FIRSTMERIT CORP has also vastly surpassed the industry average cash flow growth rate of -83.71%.
  • FIRSTMERIT CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FIRSTMERIT CORP reported lower earnings of $1.18 versus $1.23 in the prior year. This year, the market expects an improvement in earnings ($1.40 versus $1.18).
  • The gross profit margin for FIRSTMERIT CORP is currently very high, coming in at 91.43%. Regardless of FMER's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 22.99% trails the industry average.
  • FMER, with its decline in revenue, slightly underperformed the industry average of 0.3%. Since the same quarter one year prior, revenues slightly dropped by 3.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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