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

  • SWX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.1 million.
  • SWX has traded 81,629 shares today.
  • SWX is trading at 11.89 times the normal volume for the stock at this time of day.
  • SWX is trading at a new low 5.02% 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 SWX:

Southwest Gas Corporation purchases, distributes, and transports natural gas in Arizona, Nevada, and California. The company operates in two segments, Natural Gas Operations and Construction Services. The stock currently has a dividend yield of 2.7%. SWX has a PE ratio of 21. Currently there are 5 analysts that rate Southwest Gas a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Southwest Gas has been 208,200 shares per day over the past 30 days. Southwest Gas has a market cap of $2.8 billion and is part of the utilities sector and utilities industry. The stock has a beta of 0.72 and a short float of 2.1% with 3.45 days to cover. Shares are down 3.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Southwest Gas as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 19.6%. Since the same quarter one year prior, revenues rose by 18.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 101.96% to $112.00 million when compared to the same quarter last year. In addition, SOUTHWEST GAS CORP has also vastly surpassed the industry average cash flow growth rate of 1.66%.
  • The debt-to-equity ratio is somewhat low, currently at 0.99, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that SWX's debt-to-equity ratio is low, the quick ratio, which is currently 0.69, displays a potential problem in covering short-term cash needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

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