Trade-Ideas: Enphase Energy (ENPH) Is Today's Weak 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 Enphase Energy ( ENPH) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Enphase Energy as such a stock due to the following factors:

  • ENPH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.5 million.
  • ENPH has traded 125,504 shares today.
  • ENPH is trading at 2.24 times the normal volume for the stock at this time of day.
  • ENPH is trading at a new low 3.13% 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 ENPH:

Enphase Energy, Inc., together with its subsidiaries, designs, develops, and sells microinverter systems for the solar photovoltaic industry in the United States and internationally. Currently there are 6 analysts that rate Enphase Energy a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Enphase Energy has been 860,400 shares per day over the past 30 days. Enphase Energy has a market cap of $436.7 million and is part of the technology sector and electronics industry. The stock has a beta of 0.07 and a short float of 21.8% with 7.31 days to cover. Shares are down 30.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Enphase Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and weak operating cash flow.

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 compared to the Electrical Equipment industry average, but is greater than that of the S&P 500. The net income has decreased by 1.3% when compared to the same quarter one year ago, dropping from -$6.24 million to -$6.32 million.
  • Net operating cash flow has significantly decreased to -$11.50 million or 368.58% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, ENPHASE ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 35.26% is the gross profit margin for ENPHASE ENERGY INC which we consider to be strong. Regardless of ENPH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ENPH's net profit margin of -7.29% significantly underperformed when compared to the industry average.
  • ENPH has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.17, which illustrates the ability to avoid short-term cash problems.

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