Constant Contact (CTCT) Is Strong On High Volume Today

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

  • CTCT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.5 million.
  • CTCT has traded 116,019 shares today.
  • CTCT is trading at 4.12 times the normal volume for the stock at this time of day.
  • CTCT is trading at a new high 3.05% 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 CTCT:

Constant Contact, Inc. provides online marketing tools that are designed for small organizations worldwide. CTCT has a PE ratio of 79.2. Currently there are 4 analysts that rate Constant Contact a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Constant Contact has been 296,000 shares per day over the past 30 days. Constant Contact has a market cap of $1.1 billion and is part of the services sector and media industry. The stock has a beta of 2.11 and a short float of 6.2% with 2.08 days to cover. Shares are down 25% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Constant Contact as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • CTCT's revenue growth has slightly outpaced the industry average of 5.8%. Since the same quarter one year prior, revenues rose by 14.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CTCT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.85, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 266.66% and other important driving factors, this stock has surged by 34.76% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The gross profit margin for CONSTANT CONTACT INC is currently very high, coming in at 79.67%. Regardless of CTCT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CTCT's net profit margin of 3.92% is significantly lower than the industry average.
  • 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. When compared to other companies in the Internet Software & Services industry and the overall market, CONSTANT CONTACT INC's return on equity is below that of both the industry average and the S&P 500.

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