Trade-Ideas: Arch Coal (ACI) Is Today's Strong On High Relative Volume Stock

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

  • ACI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.2 million.
  • ACI has traded 751,248 shares today.
  • ACI is trading at 3.96 times the normal volume for the stock at this time of day.
  • ACI is trading at a new high 27.33% 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 ACI:

Arch Coal, Inc. produces and sells thermal and metallurgical coal from surface and underground mines located in the United States. Currently there is 1 analyst that rates Arch Coal a buy, 7 analysts rate it a sell, and 5 rate it a hold.

The average volume for Arch Coal has been 3.6 million shares per day over the past 30 days. Arch Coal has a market cap of $31.5 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of -7.78 and a short float of 32.1% with 2.98 days to cover. Shares are down 91.6% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Arch Coal as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally high debt management risk.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 73.5% when compared to the same quarter one year ago, falling from -$96.86 million to -$168.10 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ARCH COAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ARCH COAL INC is currently extremely low, coming in at 9.16%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -26.08% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$121.30 million or 218.62% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio is very high at 3.69 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, ACI has managed to keep a strong quick ratio of 2.11, which demonstrates the ability to cover short-term cash needs.

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