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

  • JMEI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $63.5 million.
  • JMEI has traded 765,537 shares today.
  • JMEI is trading at 2.18 times the normal volume for the stock at this time of day.
  • JMEI is trading at a new high 4.00% 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 JMEI:

Jumei International Holding Limited operates as an online retailer of beauty products in the People's Republic of China. The company offers beauty products, such as cosmetics, skin care, cosmetic applicators, fragrance, and body care products; and beauty products for men, and baby and children. JMEI has a PE ratio of 5. Currently there are 2 analysts that rate Jumei International a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Jumei International has been 2.6 million shares per day over the past 30 days. Jumei International has a market cap of $3.3 billion and is part of the services sector and specialty retail industry. Shares are up 67.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Jumei International as a hold. 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 and notable return on equity. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • JMEI's very impressive revenue growth greatly exceeded the industry average of 18.9%. Since the same quarter one year prior, revenues leaped by 61.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • JMEI's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.80, which clearly demonstrates the ability to cover short-term cash needs.
  • When compared to other companies in the Internet & Catalog Retail industry and the overall market, JUMEI INTL HOLDING LTD -ADR's return on equity is below that of both the industry average and the S&P 500.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Internet & Catalog Retail industry average. The net income has decreased by 5.2% when compared to the same quarter one year ago, dropping from $16.55 million to $15.69 million.
  • The gross profit margin for JUMEI INTL HOLDING LTD -ADR is currently lower than what is desirable, coming in at 31.42%. It has decreased significantly from the same period last year. Regardless of the weak results of the gross profit margin, the net profit margin of 6.26% is above that of the industry average.

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