NetEase (NTES) Flagged As Strong On High Volume

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

  • NTES has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $135.0 million.
  • NTES has traded 328,402 shares today.
  • NTES is trading at 4.07 times the normal volume for the stock at this time of day.
  • NTES 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 NTES:

NetEase, Inc., through its subsidiaries, operates an interactive online community in the People's Republic of China. The company operates in three segments: Online Game Services; Advertising Services; and E-mail, E-commerce and Others. The stock currently has a dividend yield of 1%. NTES has a PE ratio of 24. Currently there are 5 analysts that rate NetEase a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for NetEase has been 690,100 shares per day over the past 30 days. NetEase has a market cap of $18.7 billion and is part of the technology sector and internet industry. Shares are up 46.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates NetEase as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and increase in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • NTES's very impressive revenue growth greatly exceeded the industry average of 5.7%. Since the same quarter one year prior, revenues leaped by 55.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although NTES's debt-to-equity ratio of 0.05 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 4.09, which clearly demonstrates the ability to cover short-term cash needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 101.54% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, NTES should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • NETEASE INC has improved earnings per share by 12.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NETEASE INC increased its bottom line by earning $5.84 versus $5.63 in the prior year. This year, the market expects an improvement in earnings ($44.14 versus $5.84).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Internet Software & Services industry average. The net income increased by 12.8% when compared to the same quarter one year prior, going from $180.79 million to $203.97 million.

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