Corrections Corp Of America (CXW) Is Weak 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 Corrections Corp of America ( CXW) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Corrections Corp of America as such a stock due to the following factors:

  • CXW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.2 million.
  • CXW has traded 326,023 shares today.
  • CXW is trading at 14.89 times the normal volume for the stock at this time of day.
  • CXW 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 CXW:

Corrections Corporation of America, together with its subsidiaries, owns and operates privatized correctional and detention facilities in the United States. The stock currently has a dividend yield of 6.1%. CXW has a PE ratio of 21.4. Currently there are 2 analysts that rate Corrections Corp of America a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Corrections Corp of America has been 514,900 shares per day over the past 30 days. Corrections Corp of America has a market cap of $4.2 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.60 and a short float of 7.1% with 11.52 days to cover. Shares are down 2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Corrections Corp of America as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Net operating cash flow has significantly increased by 103.59% to $174.89 million when compared to the same quarter last year. In addition, CORRECTIONS CORP AMER has also vastly surpassed the industry average cash flow growth rate of -62.88%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • CORRECTIONS CORP AMER's earnings per share declined by 39.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, CORRECTIONS CORP AMER reported lower earnings of $1.66 versus $2.86 in the prior year. This year, the market expects an improvement in earnings ($1.97 versus $1.66).
  • CXW, with its decline in revenue, underperformed when compared the industry average of 9.8%. Since the same quarter one year prior, revenues slightly dropped by 1.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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