Today's Weak On High Volume Stock: Companhia De Saneamento Basico Do Estado De (SBS)

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 Companhia De Saneamento Basico Do Estado De ( SBS) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Companhia De Saneamento Basico Do Estado De as such a stock due to the following factors:

  • SBS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.3 million.
  • SBS has traded 516,269 shares today.
  • SBS is trading at 4.70 times the normal volume for the stock at this time of day.
  • SBS is trading at a new low 3.13% 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in SBS with the Ticky from Trade-Ideas. See the FREE profile for SBS NOW at Trade-Ideas

More details on SBS:

Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP provides basic and environmental sanitation services; and supplies treated water on a wholesale basis to residential, commercial, industrial, and governmental customers in the state of Sao Paulo. The stock currently has a dividend yield of 1.3%. SBS has a PE ratio of 5.4. Currently there are 2 analysts that rate Companhia De Saneamento Basico Do Estado De a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Companhia De Saneamento Basico Do Estado De has been 2.4 million shares per day over the past 30 days. Companhia De Saneamento Basico Do Estado De has a market cap of $4.4 billion and is part of the utilities sector and utilities industry. Shares are up 2.5% year-to-date as of the close of trading on Monday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Companhia De Saneamento Basico Do Estado De as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.

Highlights from the ratings report include:
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Water Utilities industry average. The net income increased by 39.4% when compared to the same quarter one year prior, rising from $261.67 million to $364.71 million.
  • 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. Compared to other companies in the Water Utilities industry and the overall market, CIA SANEAMENTO BASICO ESTADO's return on equity exceeds that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is somewhat low, currently at 0.77, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.72 is somewhat weak and could be cause for future problems.
  • SBS'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 34.26%, 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.
  • Net operating cash flow has decreased to $218.04 million or 49.35% when compared to the same quarter last year. Despite a decrease in cash flow CIA SANEAMENTO BASICO ESTADO is still fairing well by exceeding its industry average cash flow growth rate of -91.11%.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

More from Markets

Sohn Conference Briefly Distracts From Barrage of Earnings -- ICYMI

Sohn Conference Briefly Distracts From Barrage of Earnings -- ICYMI

Dow and Nasdaq Finish Lower as 10-Year Treasury Yield Hovers Near 3%

Dow and Nasdaq Finish Lower as 10-Year Treasury Yield Hovers Near 3%

Video: Stop Using Student Loan Money to Buy Bitcoin

Video: Stop Using Student Loan Money to Buy Bitcoin

Let the Najarian Brothers Crash-Proof Portfolio

Let the Najarian Brothers Crash-Proof Portfolio

Facebook Sends Facial Recognition Notification in Error

Facebook Sends Facial Recognition Notification in Error