Ciena (CIEN) Highlighted As Storm The Castle Stock

Trade-Ideas LLC identified Ciena (CIEN) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Ciena

(

CIEN

) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Ciena as such a stock due to the following factors:

  • CIEN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $57.0 million.
  • CIEN has traded 2.0 million shares today.
  • CIEN is trading at 2.12 times the normal volume for the stock at this time of day.
  • CIEN crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. 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 on. 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 CIEN:

Ciena Corporation provides equipment, software, and services that support the transport, switching, aggregation, service delivery, and management of voice, video, and data traffic on communications networks worldwide. CIEN has a PE ratio of 197. Currently there are 13 analysts that rate Ciena a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Ciena has been 3.4 million shares per day over the past 30 days. Ciena has a market cap of $2.7 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 1.77 and a short float of 8.4% with 4.04 days to cover. Shares are down 5.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Ciena as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and generally higher debt management risk.

Highlights from the ratings report include:

  • CIEN's revenue growth has slightly outpaced the industry average of 0.4%. Since the same quarter one year prior, revenues slightly increased by 3.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 60.57% to $60.70 million when compared to the same quarter last year. In addition, CIENA CORP has also vastly surpassed the industry average cash flow growth rate of -2.28%.
  • CIENA CORP's earnings per share declined by 41.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CIENA CORP turned its bottom line around by earning $0.09 versus -$0.39 in the prior year. This year, the market expects an improvement in earnings ($1.38 versus $0.09).
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Communications Equipment industry average. The net income has significantly decreased by 32.2% when compared to the same quarter one year ago, falling from $20.65 million to $14.00 million.
  • The share price of CIENA CORP has not done very well: it is down 22.95% 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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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