Strong On High Volume: Cree (CREE)

Trade-Ideas LLC identified Cree (CREE) as a strong on high relative volume candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Cree

(

CREE

) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Cree as such a stock due to the following factors:

  • CREE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $22.3 million.
  • CREE has traded 1.6 million shares today.
  • CREE is trading at 22.43 times the normal volume for the stock at this time of day.
  • CREE is trading at a new high 11.00% 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 CREE:

Cree, Inc. provides lighting-class light emitting diode (LED), lighting, and semiconductor products for power and radio-frequency (RF) applications in the United States, China, Europe, South Korea, Japan, Malaysia, Taiwan, and internationally. Currently there are 2 analysts that rate Cree a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Cree has been 1.1 million shares per day over the past 30 days. Cree has a market cap of $2.5 billion and is part of the technology sector and electronics industry. The stock has a beta of 0.50 and a short float of 17.7% with 12.85 days to cover. Shares are down 6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Cree 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 and expanding profit margins. 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:

  • CREE's debt-to-equity ratio is very low at 0.10 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 3.72, which clearly demonstrates the ability to cover short-term cash needs.
  • 38.23% is the gross profit margin for CREE INC which we consider to be strong. Regardless of CREE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.04% trails the industry average.
  • CREE INC has shown no change in earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CREE INC swung to a loss, reporting -$0.64 versus $1.01 in the prior year. This year, the market expects an improvement in earnings ($0.87 versus -$0.64).
  • Net operating cash flow has significantly decreased to $14.97 million or 77.20% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, CREE INC's return on equity significantly trails that of both the industry average and the S&P 500.

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