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

  • HTHT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $9.4 million.
  • HTHT has traded 56,486 shares today.
  • HTHT is trading at 4.20 times the normal volume for the stock at this time of day.
  • HTHT is trading at a new high 4.06% 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 HTHT:

China Lodging Group, Limited and its subsidiaries develop leased, manachised, and franchised hotels in the People's Republic of China. HTHT has a PE ratio of 31. Currently there are 5 analysts that rate China Lodging Group a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for China Lodging Group has been 175,200 shares per day over the past 30 days. China Lodging Group has a market cap of $1.7 billion and is part of the services sector and leisure industry. Shares are up 10.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates China Lodging Group as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in stock price during the past year, growth in earnings per share, increase in net income and good cash flow from operations. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.5%. Since the same quarter one year prior, revenues rose by 17.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • CHINA LODGING GROUP LTD -ADR reported significant earnings per share improvement 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 year. We feel that this trend should continue. During the past fiscal year, CHINA LODGING GROUP LTD -ADR increased its bottom line by earning $0.77 versus $0.74 in the prior year. This year, the market expects an improvement in earnings ($5.63 versus $0.77).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 47.4% when compared to the same quarter one year prior, rising from -$2.15 million to -$1.13 million.
  • Net operating cash flow has increased to $29.83 million or 42.43% when compared to the same quarter last year. In addition, CHINA LODGING GROUP LTD -ADR has also vastly surpassed the industry average cash flow growth rate of -11.64%.

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