Globalstar (GSAT) Highlighted As Weak On High Volume

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

  • GSAT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.4 million.
  • GSAT has traded 2.0 million shares today.
  • GSAT is trading at 3.83 times the normal volume for the stock at this time of day.
  • GSAT is trading at a new low 6.31% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 GSAT:

Globalstar, Inc. provides mobile voice and data communications services through satellite worldwide. Currently there is 1 analyst that rates Globalstar a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Globalstar has been 3.2 million shares per day over the past 30 days. Globalstar has a market cap of $2.3 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 3.65 and a short float of 10.5% with 12.60 days to cover. Shares are down 3.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • Net operating cash flow has decreased to $2.52 million or 33.64% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • GSAT'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 27.47%, 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.
  • 49.06% is the gross profit margin for GLOBALSTAR INC which we consider to be strong. Regardless of GSAT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GSAT's net profit margin of -617.10% significantly underperformed when compared to the industry average.
  • GLOBALSTAR 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. This trend suggests that the performance of the business is improving. During the past fiscal year, GLOBALSTAR INC continued to lose money by earning -$0.58 versus -$0.96 in the prior year. This year, the market expects an improvement in earnings (-$0.09 versus -$0.58).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 48.2% when compared to the same quarter one year prior, rising from -$250.54 million to -$129.73 million.

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