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

  • RIG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $139.8 million.
  • RIG has traded 2.6 million shares today.
  • RIG is trading at 2.36 times the normal volume for the stock at this time of day.
  • RIG is trading at a new low 6.01% 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 RIG:

Transocean Ltd., together with its subsidiaries, provides offshore contract drilling services for oil and gas wells worldwide. The company primarily offers deepwater and harsh environment drilling services. The stock currently has a dividend yield of 4%. RIG has a PE ratio of 3. Currently there are 2 analysts that rate Transocean a buy, 9 analysts rate it a sell, and 7 rate it a hold.

The average volume for Transocean has been 15.2 million shares per day over the past 30 days. Transocean has a market cap of $3.9 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.40 and a short float of 28% with 6.44 days to cover. Shares are down 11.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Transocean as a hold. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 151.6% when compared to the same quarter one year prior, rising from -$483.00 million to $249.00 million.
  • The current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, RIG has a quick ratio of 1.55, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Energy Equipment & Services industry and the overall market, TRANSOCEAN 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.
  • TRANSOCEAN 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, TRANSOCEAN LTD turned its bottom line around by earning $2.14 versus -$5.25 in the prior year. For the next year, the market is expecting a contraction of 71.0% in earnings ($0.62 versus $2.14).
  • RIG has underperformed the S&P 500 Index, declining 23.94% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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