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Trade-Ideas: Advanced Micro Devices (AMD) Is Today's Weak On High Relative Volume Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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

  • AMD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $203.0 million.
  • AMD has traded 16.4 million shares today.
  • AMD is trading at 2.51 times the normal volume for the stock at this time of day.
  • AMD is trading at a new low 3.00% 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 AMD:

Advanced Micro Devices, Inc. operates as a semiconductor company worldwide. It operates in two segments, Computing Solutions and Graphics. Currently there are 7 analysts that rate Advanced Micro Devices a buy, 3 analysts rate it a sell, and 13 rate it a hold.

The average volume for Advanced Micro Devices has been 32.8 million shares per day over the past 30 days. Advanced Micro Devices has a market cap of $2.9 billion and is part of the technology sector and electronics industry. The stock has a beta of 2.54 and a short float of 15.8% with 1.78 days to cover. Shares are up 62.5% year to date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Advanced Micro Devices as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 300.0% when compared to the same quarter one year ago, falling from $37.00 million to -$74.00 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, ADVANCED MICRO DEVICES's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$35.00 million or 143.20% 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 is very high at 5.70 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, AMD's quick ratio is somewhat strong at 1.13, demonstrating the ability to handle short-term liquidity needs.
  • The share price of ADVANCED MICRO DEVICES has not done very well: it is down 5.12% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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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