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

  • DRYS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.5 million.
  • DRYS has traded 574,331 shares today.
  • DRYS is trading at 2.16 times the normal volume for the stock at this time of day.
  • DRYS is trading at a new high 4.34% 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 DRYS:

DryShips Inc. provides ocean transportation services for drybulk and petroleum cargoes, and offshore deepwater drilling services. The company operates through Drybulk, Tanker, and Drilling segments. The stock currently has a dividend yield of 49.4%. Currently there is 1 analyst that rates DryShips a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for DryShips has been 4.7 million shares per day over the past 30 days. DryShips has a market cap of $512.4 million and is part of the services sector and transportation industry. The stock has a beta of 3.19 and a short float of 1.2% with 1.26 days to cover. Shares are down 28.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates DryShips as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Marine industry. The net income has significantly decreased by 71.2% when compared to the same quarter one year ago, falling from -$34.55 million to -$59.16 million.
  • The debt-to-equity ratio of 1.40 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • Looking at the price performance of DRYS's shares over the past 12 months, there is not much good news to report: the stock is down 73.36%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier 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.
  • 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 Marine industry and the overall market, DRYSHIPS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • DRYSHIPS INC's earnings per share declined by 12.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DRYSHIPS INC continued to lose money by earning -$0.09 versus -$0.58 in the prior year. This year, the market expects an improvement in earnings ($0.13 versus -$0.09).

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