Strong On High Volume: Analog Devices (ADI)
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.
Trade-Ideas LLC identified
(
) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Analog Devices as such a stock due to the following factors:
- ADI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $174.7 million.
- ADI has traded 1.1 million shares today.
- ADI is trading at 10.99 times the normal volume for the stock at this time of day.
- ADI is trading at a new high 8.00% above yesterday's close.
'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 ADI:
Analog Devices, Inc. engages in the design, manufacture, and marketing of analog, mixed-signal, and digital signal processing integrated circuits (ICs) for use in industrial, automotive, consumer, and communication markets worldwide. The stock currently has a dividend yield of 2.8%. ADI has a PE ratio of 27.7. Currently there are 10 analysts that rate Analog Devices a buy, no analysts rate it a sell, and 9 rate it a hold.
The average volume for Analog Devices has been 1.9 million shares per day over the past 30 days. Analog Devices has a market cap of $17.9 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.33 and a short float of 1.7% with 1.88 days to cover. Shares are up 6% year-to-date as of the close of trading on Friday.
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Analysis:
rates Analog Devices as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 10.6%. Since the same quarter one year prior, revenues rose by 22.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- ADI's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 5.18, which clearly demonstrates the ability to cover short-term cash needs.
- 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.
- Net operating cash flow has slightly increased to $168.65 million or 7.09% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -16.21%.
- ANALOG DEVICES has improved earnings per share by 18.8% 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, ANALOG DEVICES reported lower earnings of $1.98 versus $2.14 in the prior year. This year, the market expects an improvement in earnings ($2.92 versus $1.98).
- You can view the full Analog Devices Ratings Report.
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