Fuelcell Energy (FCEL) Highlighted As Weak On High Volume

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

  • FCEL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.3 million.
  • FCEL has traded 1.5 million shares today.
  • FCEL is trading at 2.82 times the normal volume for the stock at this time of day.
  • FCEL is trading at a new low 3.16% 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 FCEL:

FuelCell Energy, Inc., together its subsidiaries, designs, manufactures, sells, installs, operates, and services stationary fuel cell power plants for distributed power generation. Currently there are 2 analysts that rate Fuelcell Energy a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Fuelcell Energy has been 2.9 million shares per day over the past 30 days. Fuelcell Energy has a market cap of $313.7 million and is part of the utilities sector and utilities industry. The stock has a beta of 1.20 and a short float of 13.8% with 9.93 days to cover. Shares are down 33.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • The gross profit margin for FUELCELL ENERGY INC is currently extremely low, coming in at 10.50%. Regardless of FCEL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, FCEL's net profit margin of -34.59% significantly underperformed when compared to the industry average.
  • FCEL'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 57.03%, 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, FUELCELL ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • FCEL, with its decline in revenue, underperformed when compared the industry average of 11.6%. Since the same quarter one year prior, revenues fell by 25.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • FUELCELL ENERGY INC has improved earnings per share by 42.9% 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. This trend suggests that the performance of the business is improving. During the past fiscal year, FUELCELL ENERGY INC continued to lose money by earning -$0.18 versus -$0.20 in the prior year. This year, the market expects an improvement in earnings (-$0.10 versus -$0.18).

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