Strong On High Volume: Horsehead (ZINC)

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

  • ZINC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.5 million.
  • ZINC has traded 553,049 shares today.
  • ZINC is trading at 2.60 times the normal volume for the stock at this time of day.
  • ZINC is trading at a new high 15.07% 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 ZINC:

Horsehead Holding Corp., together with its subsidiaries, produces and sells zinc and nickel-based products primarily in the United States and Canada. The company operates through three segments: Horsehead, Zochem, and INMETCO. Currently there are 3 analysts that rate Horsehead a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Horsehead has been 2.1 million shares per day over the past 30 days. Horsehead has a market cap of $166.0 million and is part of the basic materials sector and metals & mining industry. The stock has a beta of 1.35 and a short float of 32.7% with 8.72 days to cover. Shares are down 80.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Horsehead as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • HORSEHEAD HOLDING CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, HORSEHEAD HOLDING CORP reported poor results of -$0.31 versus -$0.30 in the prior year. For the next year, the market is expecting a contraction of 290.3% in earnings (-$1.21 versus -$0.31).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 290.5% when compared to the same quarter one year ago, falling from -$7.01 million to -$27.38 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Metals & Mining industry and the overall market, HORSEHEAD HOLDING CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 84.06%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 242.85% compared to the year-earlier 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.
  • ZINC's debt-to-equity ratio of 0.90 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.

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