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.

Trade-Ideas LLC identified Linn Energy ( LINE) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Linn Energy as such a stock due to the following factors:

  • LINE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.9 million.
  • LINE has traded 424,958 shares today.
  • LINE is trading at 2.96 times the normal volume for the stock at this time of day.
  • LINE is trading at a new high 4.03% 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 LINE:

Linn Energy, LLC, an independent oil and natural gas company, acquires and develops oil and natural gas properties in the Unites States. The stock currently has a dividend yield of 10.7%. Currently there are 2 analysts that rate Linn Energy a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Linn Energy has been 2.8 million shares per day over the past 30 days. Linn Energy has a market cap of $3.9 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.04 and a short float of 7.2% with 8.23 days to cover. Shares are up 22.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Linn Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 2.27 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.48, which clearly demonstrates the inability to cover short-term cash needs.
  • The gross profit margin for LINN ENERGY LLC is currently extremely low, coming in at 5.01%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, LINE's net profit margin of -6.96% significantly underperformed when compared to the industry average.
  • LINE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 60.08%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, LINN ENERGY LLC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $276.08 million or 22.32% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -12.11%.

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