National General Holdings (NGHC) Flagged As Strong 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 National General Holdings ( NGHC) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified National General Holdings as such a stock due to the following factors:

  • NGHC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.4 million
  • NGHC has traded 340,665 shares today
  • NGHC is trading at 3.78 times the normal volume for the stock at this time of day
  • NGHC is trading at a new high 3.034819360328400161819217828451655805110931396484375 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 NGHC:

National General Holdings Corp., a specialty personal lines insurance holding company, provides personal and commercial automobile, supplemental health, homeowners and umbrella, and other niche insurance products in the United States. The stock currently has a dividend yield of 0.4%. NGHC has a PE ratio of 16. Currently there are three analysts that rate National General Holdings a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for National General Holdings has been 110,400 shares per day over the past 30 days. National General has a market cap of $1.85 billion and is part of the financial sector and insurance industry. Shares are up 8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates National General Holdings 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 impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 36.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although NGHC's debt-to-equity ratio of 0.24 is very low, it is currently higher than that of the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • The gross profit margin for NATIONAL GENERAL HOLDINGS CP is currently lower than what is desirable, coming in at 28.89%. Regardless of NGHC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.66% trails the industry average.
  • Net operating cash flow has significantly decreased to -$5.44 million or 103.36% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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