Trade-Ideas LLC identified

Applied Optoelectronics

(

AAOI

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

  • AAOI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.1 million.
  • AAOI has traded 60,229 shares today.
  • AAOI is trading at 6.38 times the normal volume for the stock at this time of day.
  • AAOI is trading at a new high 7.00% 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 AAOI:

Applied Optoelectronics, Inc. designs and manufactures optical communications products for Internet data center, cable television (CATV), and fiber-to-the-home markets. AAOI has a PE ratio of 25. Currently there are 6 analysts that rate Applied Optoelectronics a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Applied Optoelectronics has been 336,100 shares per day over the past 30 days. Applied Optoelectronics has a market cap of $224.1 million and is part of the technology sector and electronics industry. Shares are down 11.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Applied Optoelectronics as a

sell

. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from the ratings report include:

  • Net operating cash flow has significantly decreased to -$9.35 million or 1440.74% 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 return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Communications Equipment industry and the overall market, APPLIED OPTOELECTRONICS INC's return on equity is below that of both the industry average and the S&P 500.
  • Despite currently having a low debt-to-equity ratio of 0.32, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.38 is sturdy.
  • 35.76% is the gross profit margin for APPLIED OPTOELECTRONICS INC which we consider to be strong. Regardless of AAOI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AAOI's net profit margin of 4.72% is significantly lower than the industry average.
  • This stock has increased by 47.94% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.

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