Noranda Aluminum (NOR) Is Today's Strong On High 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 Noranda Aluminum ( NOR) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Noranda Aluminum as such a stock due to the following factors:

  • NOR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.5 million.
  • NOR has traded 1.0 million shares today.
  • NOR is trading at 8.65 times the normal volume for the stock at this time of day.
  • NOR is trading at a new high 4.21% 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 NOR:

Noranda Aluminum Holding Corporation produces and sells primary aluminum and rolled aluminum coils in the United States. The company's Bauxite segment mines, produces, and sells bauxite used for alumina production. The stock currently has a dividend yield of 1.9%. Currently there is 1 analyst that rates Noranda Aluminum a buy, 2 analysts rate it a sell, and 1 rates it a hold.

The average volume for Noranda Aluminum has been 710,800 shares per day over the past 30 days. Noranda Aluminum has a market cap of $144.0 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.76 and a short float of 4.1% with 0.49 days to cover. Shares are down 40.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 10.11 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, NOR has a quick ratio of 0.63, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Metals & Mining industry and the overall market, NORANDA ALUMINUM HOLDING CP's return on equity significantly trails that of both the industry average and the S&P 500.
  • NOR has underperformed the S&P 500 Index, declining 5.60% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The gross profit margin for NORANDA ALUMINUM HOLDING CP is rather low; currently it is at 18.17%. Regardless of NOR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.50% trails the industry average.
  • Net operating cash flow has increased to $26.40 million or 12.82% when compared to the same quarter last year. In addition, NORANDA ALUMINUM HOLDING CP has also vastly surpassed the industry average cash flow growth rate of -46.77%.

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