Trade-Ideas: Memorial Production Partners (MEMP) Is Today's Strong On High Relative Volume Stock

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

  • MEMP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.8 million.
  • MEMP has traded 558,905 shares today.
  • MEMP is trading at 12.17 times the normal volume for the stock at this time of day.
  • MEMP is trading at a new high 8.15% 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 MEMP:

Memorial Production Partners LP, through its subsidiary, Memorial Production Operating LLC, engages in the acquisition, development, exploitation, and production of oil and natural gas properties. The stock currently has a dividend yield of 17.1%. Currently there is 1 analyst that rates Memorial Production Partners a buy, 2 analysts rate it a sell, and 5 rate it a hold.

The average volume for Memorial Production Partners has been 771,800 shares per day over the past 30 days. Memorial Production has a market cap of $194.3 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.47 and a short float of 3.1% with 2.47 days to cover. Shares are up 2.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Memorial Production Partners 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, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 3.10 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, MEMP has a quick ratio of 0.65, 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 Oil, Gas & Consumable Fuels industry and the overall market, MEMORIAL PRODUCTION PRTRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $31.18 million or 24.17% when compared to the same quarter last year. Despite a decrease in cash flow MEMORIAL PRODUCTION PRTRS LP is still fairing well by exceeding its industry average cash flow growth rate of -38.88%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 86.45%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 53.19% 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.
  • MEMORIAL PRODUCTION PRTRS LP 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MEMORIAL PRODUCTION PRTRS LP swung to a loss, reporting -$4.69 versus $0.85 in the prior year. This year, the market expects an improvement in earnings (-$0.03 versus -$4.69).

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