Trade-Ideas: LightInTheBox (LITB) Is Today's Strong 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 LightInTheBox ( LITB) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified LightInTheBox as such a stock due to the following factors:

  • LITB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.4 million.
  • LITB has traded 130,638 shares today.
  • LITB is trading at 10.30 times the normal volume for the stock at this time of day.
  • LITB is trading at a new high 9.66% 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 LITB:

LightInTheBox Holding Co., Ltd., through its subsidiaries, operates as an online retail company. Currently there are no analysts that rate LightInTheBox a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for LightInTheBox has been 125,700 shares per day over the past 30 days. LightInTheBox has a market cap of $248.3 million and is part of the services sector and retail industry. Shares are down 16.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates LightInTheBox as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • LIGHTINTHEBOX HLDG -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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, LIGHTINTHEBOX HLDG -ADR reported poor results of -$0.61 versus -$0.16 in the prior year. For the next year, the market is expecting a contraction of 4.9% in earnings (-$0.64 versus -$0.61).
  • 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 Internet & Catalog Retail industry. The net income has significantly decreased by 134.2% when compared to the same quarter one year ago, falling from -$9.23 million to -$21.60 million.
  • 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 Internet & Catalog Retail industry and the overall market, LIGHTINTHEBOX HLDG -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for LIGHTINTHEBOX HLDG -ADR is currently lower than what is desirable, coming in at 34.56%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -24.65% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$9.86 million or 196.74% 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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