Strong On High Relative Volume: Tesla Motors (TSLA)

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

  • TSLA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $730.4 million.
  • TSLA has traded 1.0 million shares today.
  • TSLA is trading at 4.35 times the normal volume for the stock at this time of day.
  • TSLA is trading at a new high 3.00% 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 TSLA:

Tesla Motors, Inc. designs, develops, manufactures, and sells electric vehicles, electric vehicle powertrain components, and stationary energy storage systems in the United States, China, Norway, and internationally. Currently there are 10 analysts that rate Tesla Motors a buy, 3 analysts rate it a sell, and 4 rate it a hold.

The average volume for Tesla Motors has been 4.7 million shares per day over the past 30 days. Tesla has a market cap of $31.1 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.16 and a short float of 25.8% with 8.79 days to cover. Shares are up 12% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tesla Motors as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:
  • TSLA's very impressive revenue growth greatly exceeded the industry average of 7.3%. Since the same quarter one year prior, revenues leaped by 51.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 35.88% is the gross profit margin for TESLA MOTORS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -16.40% is in-line with the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Automobiles industry and the overall market, TESLA MOTORS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$131.79 million or 317.33% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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