Strong On High Relative Volume: Culp (CFI)

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

  • CFI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.1 million.
  • CFI has traded 142,159 shares today.
  • CFI is trading at 5.40 times the normal volume for the stock at this time of day.
  • CFI is trading at a new high 3.01% 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 CFI:

Culp, Inc. manufactures, sources, markets, and sells mattress fabrics and upholstery fabrics to the furniture and bedding industries in North America and internationally. The company operates through two segments, Mattress Fabrics and Upholstery Fabrics. The stock currently has a dividend yield of 0.8%. CFI has a PE ratio of 29. Currently there is 1 analyst that rates Culp a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Culp has been 71,100 shares per day over the past 30 days. Culp has a market cap of $362.8 million and is part of the industrial goods sector and industrial industry. Shares are up 36.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Culp as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income increased by 79.3% when compared to the same quarter one year prior, rising from $2.74 million to $4.91 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 6.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CFI's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CFI has a quick ratio of 1.60, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Powered by its strong earnings growth of 77.27% and other important driving factors, this stock has surged by 65.86% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CFI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.

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