Strong On High Volume: 500.com (WBAI)

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 500.com ( WBAI) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified 500.com as such a stock due to the following factors:

  • WBAI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.0 million.
  • WBAI has traded 235,437 shares today.
  • WBAI is trading at 2.17 times the normal volume for the stock at this time of day.
  • WBAI is trading at a new high 5.17% 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 WBAI:

500.com Limited provides online sports lottery services in the People's Republic of China. It operates as an aggregator and processor of lottery purchase orders from its registered user accounts. WBAI has a PE ratio of 33. Currently there is 1 analyst that rates 500.com a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for 500.com has been 1.9 million shares per day over the past 30 days. 500.com has a market cap of $773.4 million and is part of the services sector and leisure industry. Shares are up 32.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates 500.com as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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 when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 289.6% when compared to the same quarter one year ago, falling from $4.43 million to -$8.40 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 41.15%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 300.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • 500.COM LTD -ADR has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, 500.COM LTD -ADR increased its bottom line by earning $0.70 versus $0.51 in the prior year. For the next year, the market is expecting a contraction of 12.4% in earnings ($0.61 versus $0.70).
  • The gross profit margin for 500.COM LTD -ADR is currently very high, coming in at 87.48%. Regardless of WBAI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WBAI's net profit margin of -52.65% significantly underperformed when compared to the industry average.
  • In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, 500.COM LTD -ADR's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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