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

Applied Micro Circuits

(

AMCC

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

  • AMCC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.3 million.
  • AMCC has traded 106,137 shares today.
  • AMCC is trading at 2.34 times the normal volume for the stock at this time of day.
  • AMCC is trading at a new low 4.07% 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 AMCC:

Applied Micro Circuits Corporation provides connectivity and computing solutions in the United States and internationally. Currently there are 2 analysts that rate Applied Micro Circuits a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Applied Micro Circuits has been 1.1 million shares per day over the past 30 days. Applied Micro Circuits has a market cap of $550.5 million and is part of the technology sector and electronics industry. The stock has a beta of 2.05 and a short float of 13.9% with 7.53 days to cover. Shares are down 48.5% year-to-date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Applied Micro Circuits as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income 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 220.3% when compared to the same quarter one year ago, falling from $10.86 million to -$13.07 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 43.55%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 213.33% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, APPLIED MICRO CIRCUITS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • AMCC, with its decline in revenue, underperformed when compared the industry average of 10.4%. Since the same quarter one year prior, revenues slightly dropped by 7.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • APPLIED MICRO CIRCUITS CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, APPLIED MICRO CIRCUITS CORP continued to lose money by earning -$0.10 versus -$2.04 in the prior year. This year, the market expects an improvement in earnings ($0.00 versus -$0.10).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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