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

  • LGIH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.2 million.
  • LGIH has traded 335,561 shares today.
  • LGIH is trading at 2.84 times the normal volume for the stock at this time of day.
  • LGIH is trading at a new low 5.08% 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 LGIH:

LGI Homes, Inc. engages in the design, construction, marketing, and sale of new homes in Texas, Arizona, Florida, Georgia, New Mexico, South Carolina, North Carolina, Colorado, Washington, and Tennessee markets. LGIH has a PE ratio of 12. Currently there are 2 analysts that rate LGI Homes a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for LGI Homes has been 414,500 shares per day over the past 30 days. LGI Homes has a market cap of $670.9 million and is part of the financial sector and real estate industry. Shares are up 36.5% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates LGI Homes as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 3.6%. Since the same quarter one year prior, revenues rose by 34.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 72.72% and other important driving factors, this stock has surged by 61.47% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 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 Household Durables industry and the overall market on the basis of return on equity, LGI HOMES INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Net operating cash flow has significantly decreased to -$10.55 million or 95.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio of 1.23 is relatively high when compared with the industry average, suggesting a need for better debt level management.

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