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

  • DY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.6 million.
  • DY has traded 350,225 shares today.
  • DY is trading at 20.36 times the normal volume for the stock at this time of day.
  • DY is trading at a new high 19.28% 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 DY:

Dycom Industries, Inc. provides specialty contracting services in the United States and Canada. DY has a PE ratio of 3. Currently there are 5 analysts that rate Dycom Industries a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Dycom Industries has been 316,000 shares per day over the past 30 days. Dycom has a market cap of $1.6 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.69 and a short float of 3.6% with 3.57 days to cover. Shares are up 31.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Dycom Industries as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 12.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 400.00% and other important driving factors, this stock has surged by 44.07% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • DYCOM INDUSTRIES 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 year. We feel that this trend should continue. During the past fiscal year, DYCOM INDUSTRIES INC increased its bottom line by earning $1.15 versus $1.03 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus $1.15).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Construction & Engineering industry. The net income increased by 407.5% when compared to the same quarter one year prior, rising from -$3.07 million to $9.43 million.
  • DY's debt-to-equity ratio of 0.86 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that DY's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.60 is high and demonstrates strong liquidity.

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