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

  • RSPP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.5 million.
  • RSPP has traded 82,716 shares today.
  • RSPP is trading at 4.06 times the normal volume for the stock at this time of day.
  • RSPP is trading at a new high 4.14% 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 RSPP:

RSP Permian, Inc., an independent oil and natural gas company, engages in the acquisition, exploration, development, and production of unconventional oil and associated liquids-rich natural gas reserves in the Permian Basin of West Texas. RSPP has a PE ratio of 13. Currently there are 8 analysts that rate RSP Permian a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for RSP Permian has been 1.0 million shares per day over the past 30 days. RSP Permian has a market cap of $2.2 billion and is part of the basic materials sector and energy industry. Shares are up 2.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates RSP Permian as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

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 Oil, Gas & Consumable Fuels industry. The net income increased by 99.2% when compared to the same quarter one year prior, rising from -$127.53 million to -$1.02 million.
  • The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, RSPP has a quick ratio of 1.61, which demonstrates the ability of the company to cover short-term liquidity needs.
  • In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, RSP PERMIAN INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • RSPP has underperformed the S&P 500 Index, declining 14.76% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has significantly decreased to $4.75 million or 84.67% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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