NEW YORK (TheStreet) -- Our recent examination of the charts of Ambarella (AMBA) - Get Report andGoPro (GPRO) suggest that one can rally while the other could languish.
The chart of AMBA above has something to offer bears and bulls. In June and July, we can see a double top formation. The On-Balance-Volume (OBV) line peaks in June and the slope of the 50-day moving average turns down in late August. Prices are sliced to $50 by the end of October from just shy of $130 in July. A turnaround to the upside gets under way in September and October as prices make lower lows and the momentum study makes higher lows. This bullish divergence foreshadows the price improvement in November. The OBV line has turned up in November and prices are now above the 50-day moving average. A rally back into the $70 to $80 area for AMBA would be in line with the improved technical picture.
Unlike our peak and recovery story for AMBA, the shares of GPRO, chart above, show erosion all year and no technical hint yet of a turnaround or bottom. Both the 50-day and 200-day moving averages are pointed down (negative slope). The OBV line is confirming the decline since August and the momentum study has yet to diverge from the price action.
TheStreet Ratings team rates GOPRO INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate GOPRO INC (GPRO) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GPRO's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 73.23%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- Net operating cash flow has significantly decreased to $4.62 million or 90.16% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Household Durables industry average, but is greater than that of the S&P 500. The net income increased by 28.6% when compared to the same quarter one year prior, rising from $14.62 million to $18.80 million.
- 48.51% is the gross profit margin for GOPRO INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.69% trails the industry average.
- GPRO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, GPRO has a quick ratio of 1.83, which demonstrates the ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: GPRO
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.