Trade-Ideas: Advanced Micro Devices (AMD) Is Today's Weak On High Relative Volume 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
(
) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Advanced Micro Devices as such a stock due to the following factors:
- AMD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.0 million.
- AMD has traded 2.3 million shares today.
- AMD is trading at 3.32 times the normal volume for the stock at this time of day.
- AMD is trading at a new low 4.03% below yesterday's close.
'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 AMD:
Advanced Micro Devices, Inc. operates as a semiconductor company worldwide. The company's products primarily include x86 microprocessors as an accelerated processing unit (APU), chipsets, discrete graphics processing units (GPUs), and semi-custom System-on-Chip (SoC) products. Currently there are 5 analysts that rate Advanced Micro Devices a buy, 4 analysts rate it a sell, and 10 rate it a hold.
The average volume for Advanced Micro Devices has been 17.8 million shares per day over the past 30 days. Advanced Micro Devices has a market cap of $2.4 billion and is part of the technology sector and electronics industry. The stock has a beta of 2.34 and a short float of 16.9% with 10.66 days to cover. Shares are up 11.6% year-to-date as of the close of trading on Thursday.
Analysis:
rates Advanced Micro Devices as a
. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally high debt management risk and generally disappointing historical performance in the stock itself.
Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 509.0% when compared to the same quarter one year ago, falling from $89.00 million to -$364.00 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, ADVANCED MICRO DEVICES's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for ADVANCED MICRO DEVICES is currently lower than what is desirable, coming in at 32.61%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -29.37% is significantly below that of the industry average.
- The debt-to-equity ratio is very high at 11.83 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, AMD's quick ratio is somewhat strong at 1.29, demonstrating the ability to handle short-term liquidity needs.
- The share price of ADVANCED MICRO DEVICES has not done very well: it is down 16.76% 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full Advanced Micro Devices Ratings Report.
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