Strong On High Volume: Citi Trends (CTRN)

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

  • CTRN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.6 million.
  • CTRN has traded 73,502 shares today.
  • CTRN is trading at 8.15 times the normal volume for the stock at this time of day.
  • CTRN is trading at a new high 11.33% 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 CTRN:

Citi Trends, Inc. operates as a retailer of urban fashion apparel and accessories. CTRN has a PE ratio of 39. Currently there is 1 analyst that rates Citi Trends a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Citi Trends has been 171,000 shares per day over the past 30 days. Citi Trends has a market cap of $366.2 million and is part of the services sector and retail industry. The stock has a beta of -0.16 and a short float of 1.9% with 1.55 days to cover. Shares are down 7.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Citi Trends as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • CTRN's revenue growth has slightly outpaced the industry average of 12.1%. Since the same quarter one year prior, revenues rose by 15.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CITI TRENDS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CITI TRENDS INC increased its bottom line by earning $0.60 versus $0.04 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus $0.60).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 219.0% when compared to the same quarter one year prior, rising from $1.47 million to $4.67 million.
  • Net operating cash flow has significantly increased by 2292.44% to $10.74 million when compared to the same quarter last year. In addition, CITI TRENDS INC has also vastly surpassed the industry average cash flow growth rate of 19.66%.
  • 37.31% is the gross profit margin for CITI TRENDS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 2.57% trails the industry average.

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