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

  • GRPN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $33.8 million.
  • GRPN has traded 4.7 million shares today.
  • GRPN is trading at 14.10 times the normal volume for the stock at this time of day.
  • GRPN is trading at a new high 26.34% 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 GRPN:

Groupon, Inc. operates online local commerce marketplaces that connect merchants to consumers by offering goods and services at a discount worldwide. It also offers deals on products for which it acts as the merchant of record. Currently there are 3 analysts that rate Groupon a buy, 2 analysts rate it a sell, and 10 rate it a hold.

The average volume for Groupon has been 8.4 million shares per day over the past 30 days. Groupon has a market cap of $1.4 billion and is part of the technology sector and internet industry. The stock has a beta of 1.66 and a short float of 19.3% with 6.59 days to cover. Shares are down 27.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Groupon as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Internet & Catalog Retail industry average. The net income has significantly decreased by 30.2% when compared to the same quarter one year ago, falling from -$21.21 million to -$27.62 million.
  • Net operating cash flow has significantly decreased to -$26.82 million or 158.98% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 63.84%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 100.00% 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Internet & Catalog Retail industry and the overall market, GROUPON INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The revenue fell significantly faster than the industry average of 51.9%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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