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

  • LAYN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.5 million
  • LAYN has traded 149,053 shares today
  • LAYN is trading at 2.05 times the normal volume for the stock at this time of day
  • LAYN is trading at a new high 16.069368839567001572277149534784257411956787109375 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 LAYN:

Layne Christensen Company provides water management, construction, and drilling services in North America and internationally. Currently there are no analysts that rate Layne Christensen a buy, no analysts rate it a sell, and three rate it a hold.

The average volume for Layne Christensen has been 337,200 shares per day over the past 30 days. Layne Christensen has a market cap of $180.3 million and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 0.06 and a short float of 39.8% with 5.46 days to cover. Shares are down 9.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • LAYN'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 29.72%, 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 gross profit margin for LAYNE CHRISTENSEN CO is rather low; currently it is at 17.33%. Regardless of LAYN'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 -3.37% trails the industry average.
  • 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 Construction & Engineering industry and the overall market, LAYNE CHRISTENSEN CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • LAYN's debt-to-equity ratio of 0.97 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.01 is sturdy.
  • Net operating cash flow has significantly increased by 204.32% to $13.24 million when compared to the same quarter last year. In addition, LAYNE CHRISTENSEN CO has also vastly surpassed the industry average cash flow growth rate of 58.86%.

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