Cherokee (CHKE) Strong On High Relative Volume Today

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

  • CHKE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.7 million.
  • CHKE has traded 158,976 shares today.
  • CHKE is trading at 2.64 times the normal volume for the stock at this time of day.
  • CHKE is trading at a new high 6.08% 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 CHKE:

Cherokee Inc. markets, manages, and licenses fashion and lifestyle brands for apparel, footwear, home, and accessories worldwide. CHKE has a PE ratio of 14. Currently there are 4 analysts that rate Cherokee a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Cherokee has been 114,800 shares per day over the past 30 days. Cherokee has a market cap of $134.2 million and is part of the services sector and retail industry. The stock has a beta of 0.50 and a short float of 3.6% with 0.88 days to cover. Shares are down 18.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cherokee as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • 40.80% is the gross profit margin for CHEROKEE INC/DE which we consider to be strong. Regardless of CHKE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CHKE's net profit margin of 22.75% significantly outperformed against the industry.
  • Despite currently having a low debt-to-equity ratio of 0.56, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that CHKE's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.04 is high and demonstrates strong liquidity.
  • CHKE, with its decline in revenue, underperformed when compared the industry average of 9.9%. Since the same quarter one year prior, revenues slightly dropped by 3.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 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. When compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, CHEROKEE INC/DE's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • CHEROKEE INC/DE's earnings per share declined by 18.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CHEROKEE INC/DE increased its bottom line by earning $1.16 versus $0.72 in the prior year. For the next year, the market is expecting a contraction of 5.6% in earnings ($1.10 versus $1.16).

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