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

  • ITG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.8 million.
  • ITG has traded 60,537 shares today.
  • ITG is trading at 3.26 times the normal volume for the stock at this time of day.
  • ITG is trading at a new low 4.03% 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 ITG:

Investment Technology Group, Inc. operates as an independent execution and research broker in the United States, Canada, Europe, and the Asia Pacific regions. The stock currently has a dividend yield of 1%. ITG has a PE ratio of 18. Currently there is 1 analyst that rates Investment Technology Group a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Investment Technology Group has been 406,100 shares per day over the past 30 days. Investment Technology Group has a market cap of $939.2 million and is part of the financial sector and financial services industry. The stock has a beta of 0.01 and a short float of 2.7% with 2.44 days to cover. Shares are up 33.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Investment Technology Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and solid stock price performance. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • ITG's revenue growth has slightly outpaced the industry average of 5.7%. Since the same quarter one year prior, revenues slightly increased by 8.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • INVESTMENT TECHNOLOGY GP INC has improved earnings per share by 27.0% 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, INVESTMENT TECHNOLOGY GP INC increased its bottom line by earning $1.40 versus $0.81 in the prior year. This year, the market expects an improvement in earnings ($1.72 versus $1.40).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Capital Markets industry average. The net income increased by 22.9% when compared to the same quarter one year prior, going from $13.62 million to $16.73 million.
  • Powered by its strong earnings growth of 27.02% and other important driving factors, this stock has surged by 42.20% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, INVESTMENT TECHNOLOGY GP INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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