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

  • AVP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.1 million.
  • AVP has traded 2.8 million shares today.
  • AVP is trading at 11.69 times the normal volume for the stock at this time of day.
  • AVP is trading at a new low 14.15% 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 AVP:

Avon Products, Inc. manufactures and markets beauty and related products worldwide. The stock currently has a dividend yield of 5.8%. Currently there is 1 analyst that rates Avon Products a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for Avon Products has been 9.9 million shares per day over the past 30 days. Avon has a market cap of $1.8 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 2.57 and a short float of 17% with 9.68 days to cover. Shares are down 54.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Avon Products as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 55.23 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, AVP has a quick ratio of 0.60, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • 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. Compared to other companies in the Personal Products industry and the overall market, AVON PRODUCTS's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $88.20 million or 16.39% 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.
  • AVP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 64.79%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The gross profit margin for AVON PRODUCTS is rather high; currently it is at 63.29%. Regardless of AVP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AVP's net profit margin of 1.57% is significantly lower than the industry average.

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