Research In Motion Ltd (BBRY), Facebook Inc (FB), Zynga Inc (ZNGA): Does Bigger Volume Mean Bigger Profits?

Its moving average sales volume over a 100-day period was 51,047,078 shares, so it is obviously attracting considerable interest. But it does not appear to be justifying buyers’ confidence. Research In Motion Ltd (NASDAQ:BBRY) is not currently profitable, having a diluted earnings per share of -$1.23 per share for the first quarter of 2013.

To make matters worse, Research In Motion Ltd (NASDAQ:BBRY)’s income has fallen precipitously during the past year. Its net income for the period ending on March 1, 2013 was -$646,000,000, while just two years earlier it was $3,411,000 for a comparable period. And these days the market is not forgiving. Sell orders are placed at the first sign of weakness, and once a stock has dipped it is hard for it to regain its momentum, particularly if it is one without a strong track record and an impressive market share. It might be difficult to overlook these quarterly results as being simply a bump in the road to more impressive returns, an emerging company’s growing pains.

Foolish conclusion

The thought of following huge sales volume to gains that are equally as impressive has a certain appeal. But despite the fact that the practice might sound solid in principle, it is not necessarily a smart course to follow. At least in the case of three stocks – Research In Motion Ltd (NASDAQ:BBRY), Facebook Inc (NASDAQ:FB), and Zynga Inc (NASDAQ:ZNGA) – impressive sales volumes have not always translated into financial returns that extend into bragging rights territory.

Fundamentals, such as the price-to-earnings ratio and enterprise value, might be a better indication of where your money is best allocated. Following this strategy might point you to gains which might not be titillating but might be well worth your consideration. And it is hard if not virtually impossible to find a stock that represents the perfect mix: a cutting edge product that elicits interest and offers pristine fundamentals.

Harriet Tramer Tramer has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook.

The article Does Bigger Volume Mean Bigger Profits? originally appeared on Fool.com.

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