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

  • DO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $58.2 million.
  • DO has traded 196,771 shares today.
  • DO is trading at 2.43 times the normal volume for the stock at this time of day.
  • DO is trading at a new high 3.06% 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 DO:

Diamond Offshore Drilling, Inc. provides contract drilling services to the energy industry worldwide. The company provides services in floater market, such as ultra-deepwater, deepwater, and mid-water; and non-floater or jack-up market. The stock currently has a dividend yield of 2.1%. Currently there are no analysts that rate Diamond Offshore Drilling a buy, 10 analysts rate it a sell, and 7 rate it a hold.

The average volume for Diamond Offshore Drilling has been 1.8 million shares per day over the past 30 days. has a market cap of $3.3 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.95 and a short float of 20.7% with 6.60 days to cover. Shares are down 32% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Diamond Offshore Drilling as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.84 is somewhat weak and could be cause for future problems.
  • 40.21% is the gross profit margin for DIAMOND OFFSHRE DRILLING INC which we consider to be strong. Regardless of DO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DO's net profit margin of -41.23% significantly underperformed when compared to the industry average.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, DIAMOND OFFSHRE DRILLING INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $160.57 million or 47.01% 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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