This post takes a look at Trex Inc. TWP:NYQ. This company manufactures and distributes wood and plastic composite products primarily for residential and commercial decking and railing applications in the United States and Canada.
As we can see from the chart below, this stock has had quite a rally since June. This price increase has also been tied to a huge increase in volume.
| Name | 1 Week | 1 Month | 6 Month | 1 Year | 5 Year |
|---|---|---|---|---|---|
| Trex Inc TWP:NYQ | +10.71% | +13.33% | +163.17% | +58.14% | -40.54% |
The gains in this stock in the past six months has been tremendous, with a 6 month gain of 163.7 %.
What seems to be supporting this increase?
Volume. Its average volume for the past 3 months is 251,208. Yet the volume for the past 10 days has averaged close to 386,000. What seems to be happening here is some institutional buying.
What does not seem to be supporting this increase?
This company does not seem to have the fundamentals to back this increase. First off, the company reported a loss of $4.39 per share in its last fiscal quarter. Additionally, the company reported a net income of $ -75,912 in the fiscal year ending on December 31,2007. The forecasts also do not look very favorable.
High oil prices have also had a negative effect on its operations because high crude oil prices have caused the price of plastic to increase in the last few months.
I do not see TWP’s stock price increasing very much after the rally it has had in the last few months. Thus, if anything, it seems that shorting the stock, at least in the short term, may be the most suitable option.
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And the same pattern still continues…