Trade-Ideas: General Cable (BGC) Is Today's Strong On High Relative Volume Stock

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

  • BGC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.4 million.
  • BGC has traded 83,396 shares today.
  • BGC is trading at 2.87 times the normal volume for the stock at this time of day.
  • BGC is trading at a new high 7.27% 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 BGC:

General Cable Corporation designs, develops, manufactures, markets, and distributes copper, aluminum, and fiber optic wire and cable products for the energy, industrial, construction, and specialty and communications markets worldwide. The stock currently has a dividend yield of 4.4%. Currently there is 1 analyst that rates General Cable a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for General Cable has been 734,300 shares per day over the past 30 days. General Cable has a market cap of $803.7 million and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.79 and a short float of 7.9% with 9.21 days to cover. Shares are up 10% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates General Cable as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • 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 Electrical Equipment industry. The net income has significantly decreased by 1282.6% when compared to the same quarter one year ago, falling from $13.80 million to -$163.20 million.
  • The debt-to-equity ratio is very high at 2.96 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, BGC maintains a poor quick ratio of 0.82, which illustrates the inability to avoid short-term cash problems.
  • 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 Electrical Equipment industry and the overall market, GENERAL CABLE CORP/DE's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for GENERAL CABLE CORP/DE is rather low; currently it is at 21.12%. Regardless of BGC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, BGC's net profit margin of -10.55% significantly underperformed when compared to the industry average.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.34%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1340.74% 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.

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