Strong On High Relative Volume: NQ Mobile (NQ)

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

  • NQ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $21.2 million.
  • NQ has traded 644,464 shares today.
  • NQ is trading at 5.55 times the normal volume for the stock at this time of day.
  • NQ is trading at a new high 5.04% 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 NQ:

NQ Mobile Inc. provides mobile Internet services in the People's Republic of China and internationally. The company provides products and services in the areas of mobile security, privacy, productivity, personalized cloud, and family protection. NQ has a PE ratio of 33.

The average volume for NQ Mobile has been 1.6 million shares per day over the past 30 days. NQ Mobile has a market cap of $507.0 million and is part of the technology sector and computer software & services industry. Shares are up 59.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates NQ Mobile as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Software industry and the overall market, NQ MOBILE INC -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NQ MOBILE INC -ADR is rather low; currently it is at 21.04%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -19.11% is significantly below that of the industry average.
  • NQ's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 48.65%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • NQ MOBILE INC -ADR has improved earnings per share by 44.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NQ MOBILE INC -ADR reported poor results of -$0.98 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings ($0.32 versus -$0.98).
  • Despite currently having a low debt-to-equity ratio of 0.36, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.63 is very high and demonstrates very strong liquidity.

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