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

  • CERE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.4 million.
  • CERE has traded 56,494 shares today.
  • CERE is trading at 2.83 times the normal volume for the stock at this time of day.
  • CERE is trading at a new high 5.05% 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 CERE:

Ceres, Inc., an agricultural biotechnology company, develops and sells energy crops to produce renewable bioenergy feedstocks in North America. Currently there is 1 analyst that rates Ceres a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Ceres has been 497,000 shares per day over the past 30 days. Ceres has a market cap of $14.3 million and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.35 and a short float of 0.8% with 0.15 days to cover. Shares are up 23.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ceres as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CERES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$6.44 million or 12.38% when compared to the same quarter last year. Despite a decrease in cash flow CERES INC is still fairing well by exceeding its industry average cash flow growth rate of -53.17%.
  • CERE'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 54.33%, 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.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income has decreased by 12.2% when compared to the same quarter one year ago, dropping from -$7.23 million to -$8.11 million.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 38.6%. Since the same quarter one year prior, revenues fell by 30.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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