Weak On High Volume: Stock Building Supply Holdings (STCK)

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

  • STCK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.1 million.
  • STCK has traded 80,673 shares today.
  • STCK is trading at 3.28 times the normal volume for the stock at this time of day.
  • STCK is trading at a new low 3.12% 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 STCK:

Stock Building Supply Holdings, Inc., together with its subsidiaries, distributes lumber and building materials in the United States. STCK has a PE ratio of 31. Currently there is 1 analyst that rates Stock Building Supply Holdings a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Stock Building Supply Holdings has been 74,100 shares per day over the past 30 days. Stock Building Supply has a market cap of $473.8 million and is part of the industrial goods sector and materials & construction industry. Shares are up 33.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Stock Building Supply Holdings as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • STCK's revenue growth has slightly outpaced the industry average of 5.0%. Since the same quarter one year prior, revenues slightly increased by 6.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.61, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.09, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly decreased to $2.60 million or 68.90% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • STCK has underperformed the S&P 500 Index, declining 10.14% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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