Strong On High Relative Volume: Gentherm (THRM)

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

  • THRM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $18.6 million.
  • THRM has traded 85,845 shares today.
  • THRM is trading at 5.42 times the normal volume for the stock at this time of day.
  • THRM is trading at a new high 4.01% 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 THRM:

Gentherm Incorporated designs, develops, manufactures, and sells thermal management technologies and cable systems worldwide. It operates in two segments, Automotive and Industrial. THRM has a PE ratio of 2. Currently there are 6 analysts that rate Gentherm a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Gentherm has been 374,500 shares per day over the past 30 days. Gentherm has a market cap of $1.5 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 2.31 and a short float of 4.6% with 3.91 days to cover. Shares are up 17.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Gentherm as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • THRM's revenue growth has slightly outpaced the industry average of 5.3%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • THRM's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, THRM has a quick ratio of 1.61, which demonstrates the ability of the company to cover short-term liquidity needs.
  • GENTHERM INC has improved earnings per share by 15.2% 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, GENTHERM INC increased its bottom line by earning $1.96 versus $0.94 in the prior year. This year, the market expects an improvement in earnings ($2.26 versus $1.96).
  • Net operating cash flow has increased to $30.94 million or 12.43% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.15%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Auto Components industry and the overall market on the basis of return on equity, GENTHERM INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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