Trade-Ideas: Convergys (CVG) Is Today's Strong On High Relative Volume Stock

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

  • CVG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.5 million.
  • CVG has traded 61,584 shares today.
  • CVG is trading at 3.47 times the normal volume for the stock at this time of day.
  • CVG is trading at a new high 4.14% 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 CVG:

Convergys Corporation provides customer management services to communications and media, technology, financial services, retail, and healthcare industries in North America and internationally. The stock currently has a dividend yield of 1.2%. CVG has a PE ratio of 16. Currently there is 1 analyst that rates Convergys a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Convergys has been 480,700 shares per day over the past 30 days. Convergys has a market cap of $2.5 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.34 and a short float of 7.6% with 16.14 days to cover. Shares are up 5.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Convergys as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, expanding profit margins, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • CVG's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CVG has a quick ratio of 2.23, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 37.36% is the gross profit margin for CONVERGYS CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.66% trails the industry average.
  • Net operating cash flow has increased to $66.60 million or 24.25% when compared to the same quarter last year. Despite an increase in cash flow, CONVERGYS CORP's average is still marginally south of the industry average growth rate of 31.80%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the IT Services industry and the overall market on the basis of return on equity, CONVERGYS CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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