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

  • HILL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.2 million.
  • HILL has traded 81,170 shares today.
  • HILL is trading at 2.06 times the normal volume for the stock at this time of day.
  • HILL is trading at a new high 3.11% 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 HILL:

Dot Hill Systems Corp. designs, manufactures, and markets a range of software and hardware storage systems for the entry and mid-range storage markets worldwide. HILL has a PE ratio of 107. Currently there are 5 analysts that rate Dot Hill Systems a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Dot Hill Systems has been 621,200 shares per day over the past 30 days. Dot Hill Systems has a market cap of $392.4 million and is part of the technology sector and computer hardware industry. The stock has a beta of 1.32 and a short float of 2% with 1.63 days to cover. Shares are up 45.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Dot Hill Systems as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • DOT HILL SYSTEMS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DOT HILL SYSTEMS CORP increased its bottom line by earning $0.12 versus $0.10 in the prior year. This year, the market expects an improvement in earnings ($0.31 versus $0.12).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Computers & Peripherals industry. The net income increased by 1039.6% when compared to the same quarter one year prior, rising from -$0.41 million to $3.87 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 32.9%. Since the same quarter one year prior, revenues rose by 26.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HILL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, HILL has a quick ratio of 1.83, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 484.37% to $6.47 million when compared to the same quarter last year. In addition, DOT HILL SYSTEMS CORP has also vastly surpassed the industry average cash flow growth rate of 48.37%.

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