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

  • MEOH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $53.3 million.
  • MEOH has traded 68,942 shares today.
  • MEOH is trading at 2.30 times the normal volume for the stock at this time of day.
  • MEOH is trading at a new low 3.00% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 MEOH:

Methanex Corporation produces and supplies methanol in the Asia Pacific, North America, Europe, and South America. It also purchases methanol produced by others under methanol offtake contracts and on the spot market. The company was founded in 1968 and is headquartered in Vancouver, Canada. The stock currently has a dividend yield of 2.4%. MEOH has a PE ratio of 15. Currently there are 5 analysts that rate Methanex a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Methanex has been 747,200 shares per day over the past 30 days. Methanex has a market cap of $4.1 billion and is part of the basic materials sector and chemicals industry. Shares are up 2.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Methanex 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 attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.89, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.40, which illustrates the ability to avoid short-term cash problems.
  • MEOH, with its decline in revenue, slightly underperformed the industry average of 10.9%. Since the same quarter one year prior, revenues fell by 19.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Net operating cash flow has significantly decreased to $82.14 million or 65.80% 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.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Chemicals industry average. The net income has decreased by 16.2% when compared to the same quarter one year ago, dropping from $124.78 million to $104.58 million.

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