Weak On High Volume: ChinaCache International Holdings (CCIH)

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

  • CCIH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.4 million.
  • CCIH has traded 67,897 shares today.
  • CCIH is trading at 3.61 times the normal volume for the stock at this time of day.
  • CCIH is trading at a new low 6.01% 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 CCIH:

ChinaCache International Holdings Ltd., through its subsidiaries, provides content and application delivery services in the People's Republic of China. CCIH has a PE ratio of 306.0. Currently there is 1 analyst that rates ChinaCache International Holdings a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for ChinaCache International Holdings has been 197,300 shares per day over the past 30 days. ChinaCache International has a market cap of $329.5 million and is part of the technology sector and internet industry. Shares are up 28.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ChinaCache International Holdings as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • 38.82% is the gross profit margin for CHINACACHE INTL HLDGS -ADR which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -6.15% is in-line with the industry average.
  • Although CCIH's debt-to-equity ratio of 0.14 is very low, it is currently higher than that of the industry average. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.91 is somewhat weak and could be cause for future problems.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 35.53%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 44.44% compared to the year-earlier 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 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 Internet Software & Services industry. The net income has significantly decreased by 40.6% when compared to the same quarter one year ago, falling from -$2.37 million to -$3.33 million.

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