Cosan (CZZ) Highlighted As Weak On High Volume

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

  • CZZ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.2 million.
  • CZZ has traded 178,006 shares today.
  • CZZ is trading at 4.33 times the normal volume for the stock at this time of day.
  • CZZ is trading at a new low 4.09% 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 CZZ:

Cosan Limited, together with its subsidiaries, engages in piped natural gas, Logistics service, agricultural land, lubricant, sugar and ethanol, and fuel businesses primarily in Brazil and internationally. The stock currently has a dividend yield of 1.6%. CZZ has a PE ratio of 5. Currently there is 1 analyst that rates Cosan a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Cosan has been 1.0 million shares per day over the past 30 days. Cosan has a market cap of $1.5 billion and is part of the utilities sector and utilities industry. The stock has a beta of 2.90 and a short float of 1.1% with 1.19 days to cover. Shares are up 52.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cosan as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 24.6%. Since the same quarter one year prior, revenues rose by 31.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • COSAN LTD reported significant earnings per share improvement 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, COSAN LTD increased its bottom line by earning $0.39 versus $0.10 in the prior year. This year, the market expects an improvement in earnings ($2.63 versus $0.39).
  • 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, COSAN LTD's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • CZZ has underperformed the S&P 500 Index, declining 19.12% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The debt-to-equity ratio is very high at 3.42 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, CZZ maintains a poor quick ratio of 0.83, which illustrates the inability to avoid short-term cash problems.

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