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

  • KSU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $107.3 million.
  • KSU has traded 248,145 shares today.
  • KSU is trading at 2.75 times the normal volume for the stock at this time of day.
  • KSU is trading at a new high 3.03% 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 KSU:

Kansas City Southern, through its subsidiaries, provides freight rail transportation services. The company operates north/south rail route between Kansas City, Missouri, and various ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi, and Texas. The stock currently has a dividend yield of 1.4%. KSU has a PE ratio of 2. Currently there are 5 analysts that rate Kansas City Southern a buy, 2 analysts rate it a sell, and 6 rate it a hold.

The average volume for Kansas City Southern has been 1.4 million shares per day over the past 30 days. Kansas City Southern has a market cap of $9.9 billion and is part of the services sector and transportation industry. The stock has a beta of 0.68 and a short float of 4% with 3.77 days to cover. Shares are up 23.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Kansas City Southern as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Road & Rail industry average. The net income increased by 6.9% when compared to the same quarter one year prior, going from $100.80 million to $107.80 million.
  • 46.60% is the gross profit margin for KANSAS CITY SOUTHERN 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 19.15% trails the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.60, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.32 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Net operating cash flow has declined marginally to $160.30 million or 1.35% when compared to the same quarter last year. Despite a decrease in cash flow of 1.35%, KANSAS CITY SOUTHERN is in line with the industry average cash flow growth rate of -3.20%.
  • KSU has underperformed the S&P 500 Index, declining 7.14% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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