Strong On High Volume: Westport Innovations (WPRT)

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

  • WPRT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.6 million.
  • WPRT has traded 409,673 shares today.
  • WPRT is trading at 11.03 times the normal volume for the stock at this time of day.
  • WPRT is trading at a new high 10.17% 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 WPRT:

Westport Innovations Inc. provides low-emission engine and fuel system technologies utilizing gaseous fuels. The company's technology and products enable light, medium, heavy-duty, and high horsepower petroleum-based fuel engines and vehicles to use primarily natural gas and alternative fuels. Currently there are 2 analysts that rate Westport Innovations a buy, 1 analyst rates it a sell, and 11 rate it a hold.

The average volume for Westport Innovations has been 838,400 shares per day over the past 30 days. Westport Innovations has a market cap of $303.0 million and is part of the consumer goods sector and automotive industry. Shares are up 26.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Machinery industry and the overall market, WESTPORT INNOVATIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$23.35 million or 30.60% when compared to the same quarter last year. Despite a decrease in cash flow of 30.60%, WESTPORT INNOVATIONS INC is in line with the industry average cash flow growth rate of -31.99%.
  • WPRT'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 65.48%, 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 revenue fell significantly faster than the industry average of 10.3%. Since the same quarter one year prior, revenues fell by 47.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, WPRT has a quick ratio of 1.63, which demonstrates the ability of the company to cover short-term liquidity needs.

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