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Trade-Ideas: Marvell Technology Group (MRVL) Is Today's "Water-Logged And Getting Wetter" 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 Marvell Technology Group (MRVL) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Marvell Technology Group as such a stock due to the following factors:

  • MRVL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $62.3 million.
  • MRVL has traded 259,420 shares today.
  • MRVL traded in a range 240.4% of the normal price range with a price range of $0.77.
  • MRVL traded below its daily resistance level (quality: 25 days, meaning that the stock is crossing a resistance level set by the last 25 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on MRVL:

Marvell Technology Group Ltd. designs, develops, and markets analog, mixed-signal, digital signal processing, and embedded and standalone ARM-based microprocessor integrated circuits. The stock currently has a dividend yield of 1.9%. MRVL has a PE ratio of 27.9. Currently there are 10 analysts that rate Marvell Technology Group a buy, 3 analysts rate it a sell, and 10 rate it a hold.

The average volume for Marvell Technology Group has been 5.8 million shares per day over the past 30 days. Marvell Technology Group has a market cap of $6.2 billion and is part of the technology sector and electronics industry. The stock has a beta of 0.79 and a short float of 2.9% with 1.87 days to cover. Shares are up 73% year to date as of the close of trading on Friday.

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 Marvell Technology Group as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • MRVL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.20, which clearly demonstrates the ability to cover short-term cash needs.
  • Despite the weak revenue results, MRVL has outperformed against the industry average of 13.7%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The gross profit margin for MARVELL TECHNOLOGY GROUP LTD is rather high; currently it is at 55.93%. Regardless of MRVL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MRVL's net profit margin of 7.66% is significantly lower than the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, MARVELL TECHNOLOGY GROUP LTD's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $86.50 million or 54.28% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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