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

  • VIP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.2 million.
  • VIP has traded 570,884 shares today.
  • VIP is trading at 2.30 times the normal volume for the stock at this time of day.
  • VIP is trading at a new low 4.02% 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 VIP:

VimpelCom Ltd. provides telecommunications services in Italy, Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Laos, Algeria, Bangladesh, and Pakistan. The stock currently has a dividend yield of 0.4%. Currently there are 3 analysts that rate VimpelCom a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for VimpelCom has been 2.0 million shares per day over the past 30 days. VimpelCom has a market cap of $11.2 billion and is part of the technology sector and telecommunications industry. Shares are up 52.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 5.08 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, VIP maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.
  • VIP'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 26.03%, 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.
  • Net operating cash flow has decreased to $1,399.00 million or 30.39% when compared to the same quarter last year. Despite a decrease in cash flow of 30.39%, VIMPELCOM LTD is in line with the industry average cash flow growth rate of -37.17%.
  • 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 Wireless Telecommunication Services industry and the overall market, VIMPELCOM LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for VIMPELCOM LTD is currently very high, coming in at 73.95%. Regardless of VIP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VIP's net profit margin of -20.29% significantly underperformed when compared to the industry average.

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