Trade-Ideas: Cosan (CZZ) Is Today's Strong 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 Cosan ( CZZ) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Cosan as such a stock due to the following factors:

  • CZZ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.2 million.
  • CZZ has traded 205,365 shares today.
  • CZZ is trading at 2.75 times the normal volume for the stock at this time of day.
  • CZZ is trading at a new high 8.06% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 CZZ:

Cosan Limited, together with its subsidiaries, is engaged in sugar and ethanol, fuel, logistics services, lubricants, and piped natural gas businesses primarily in Brazil, rest of South America, Europe, the Middle East, Asia, and North America. The stock currently has a dividend yield of 2%. CZZ has a PE ratio of 6.0. Currently there are 2 analysts that rate Cosan a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Cosan has been 1.7 million shares per day over the past 30 days. Cosan has a market cap of $1.3 billion and is part of the utilities sector and utilities industry. Shares are down 4% 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 Cosan as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 99.9% when compared to the same quarter one year ago, falling from $158.90 million to $0.22 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 38.54%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 107.69% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The debt-to-equity ratio of 1.29 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, CZZ's quick ratio is somewhat strong at 1.15, demonstrating the ability to handle short-term liquidity needs.
  • COSAN LTD 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. This year, the market expects an improvement in earnings ($0.76 versus $0.61).
  • CZZ, with its decline in revenue, slightly underperformed the industry average of 21.3%. Since the same quarter one year prior, revenues fell by 29.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing 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.

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