International Paper (IP) Stock: Weak On High Volume Today

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

  • IP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $129.3 million.
  • IP has traded 803,659 shares today.
  • IP is trading at 4.17 times the normal volume for the stock at this time of day.
  • IP is trading at a new low 4.01% 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 IP:

International Paper Company operates as a paper and packaging company in North America, Europe, Latin America, Russia, Asia, Africa, and the Middle East. The company operates through three segments: Industrial Packaging, Printing Papers, and Consumer Packaging. The stock currently has a dividend yield of 3.1%. IP has a PE ratio of 23. Currently there are 6 analysts that rate International Paper a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for International Paper has been 2.8 million shares per day over the past 30 days. International has a market cap of $21.5 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 0.95 and a short float of 2.9% with 4.32 days to cover. Shares are down 4.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates International Paper as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations, increase in stock price during the past year, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • 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 Paper & Forest Products industry and the overall market, INTL PAPER CO's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $638.00 million or 35.45% when compared to the same quarter last year. Despite an increase in cash flow, INTL PAPER CO's average is still marginally south of the industry average growth rate of 40.96%.
  • 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. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • INTL PAPER CO reported significant earnings per share improvement 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, INTL PAPER CO reported lower earnings of $1.33 versus $3.81 in the prior year. This year, the market expects an improvement in earnings ($3.92 versus $1.33).
  • IP, with its decline in revenue, slightly underperformed the industry average of 0.9%. Since the same quarter one year prior, revenues slightly dropped by 3.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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