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

  • MTG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.8 million.
  • MTG has traded 370,769 shares today.
  • MTG is trading at 2.31 times the normal volume for the stock at this time of day.
  • MTG is trading at a new low 3.05% 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 MTG:

MGIC Investment Corporation, through its subsidiaries, provides private mortgage insurance and ancillary services to lenders and government sponsored entities in the United States. MTG has a PE ratio of 3. Currently there are 3 analysts that rate MGIC Investment a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for MGIC Investment has been 6.1 million shares per day over the past 30 days. MGIC Investment has a market cap of $2.6 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.94 and a short float of 9.2% with 7.82 days to cover. Shares are down 14.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates MGIC Investment as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.1%. Since the same quarter one year prior, revenues slightly increased by 7.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, MGIC INVESTMENT CORP/WI's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • MGIC INVESTMENT CORP/WI has improved earnings per share by 26.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, MGIC INVESTMENT CORP/WI increased its bottom line by earning $2.62 versus $0.64 in the prior year. For the next year, the market is expecting a contraction of 66.4% in earnings ($0.88 versus $2.62).
  • MTG has underperformed the S&P 500 Index, declining 20.36% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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