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Linear Technology (LLTC) Showing Signs Of Being Water-Logged And Getting Wetter

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 Linear Technology (LLTC) 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 Linear Technology as such a stock due to the following factors:

  • LLTC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $85.2 million.
  • LLTC has traded 1.2 million shares today.
  • LLTC traded in a range 205.8% of the normal price range with a price range of $1.31.
  • LLTC traded below its daily resistance level (quality: 9 days, meaning that the stock is crossing a resistance level set by the last 9 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 LLTC:

Linear Technology Corporation, together with its subsidiaries, designs, manufactures, and markets a line of analog integrated circuits (ICs) worldwide. The stock currently has a dividend yield of 2.3%. LLTC has a PE ratio of 26.8. Currently there are 8 analysts that rate Linear Technology a buy, 2 analysts rate it a sell, and 8 rate it a hold.

The average volume for Linear Technology has been 2.2 million shares per day over the past 30 days. Linear Technology has a market cap of $11.2 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.25 and a short float of 4% with 5.15 days to cover. Shares are up 4.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Linear Technology as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • LLTC's revenue growth has slightly outpaced the industry average of 5.3%. Since the same quarter one year prior, revenues slightly increased by 9.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • LINEAR TECHNOLOGY CORP has improved earnings per share by 15.8% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, LINEAR TECHNOLOGY CORP increased its bottom line by earning $1.72 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($1.93 versus $1.72).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry average. The net income increased by 17.9% when compared to the same quarter one year prior, going from $88.83 million to $104.75 million.
  • The gross profit margin for LINEAR TECHNOLOGY CORP is currently very high, coming in at 79.16%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 31.30% significantly outperformed against the industry average.

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

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