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

  • ECOM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.5 million.
  • ECOM has traded 179,013 shares today.
  • ECOM is trading at 23.97 times the normal volume for the stock at this time of day.
  • ECOM is trading at a new high 18.06% 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 ECOM:

ChannelAdvisor Corporation provides software-as-a-service solutions worldwide. The company's solutions allow its retailers and manufacturers to integrate, manage, monitor, and optimize their merchandise sales in various online channels. Currently there are no analysts that rate ChannelAdvisor a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for ChannelAdvisor has been 361,400 shares per day over the past 30 days. ChannelAdvisor has a market cap of $246.4 million and is part of the technology sector and computer software & services industry. Shares are down 54.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ChannelAdvisor as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has declined marginally to -$4.71 million or 10.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • ECOM'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 61.02%, 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.
  • CHANNELADVISOR CORP has improved earnings per share by 31.6% 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, CHANNELADVISOR CORP reported poor results of -$1.40 versus -$0.82 in the prior year. This year, the market expects an improvement in earnings (-$0.95 versus -$1.40).
  • Compared to other companies in the Internet Software & Services industry and the overall market, CHANNELADVISOR CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CHANNELADVISOR CORP is currently very high, coming in at 82.46%. 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 -27.43% is in-line with the industry average.

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