Avago Technologies (AVGO) Is Today's Storm The Castle Stock - TheStreet

Trade-Ideas LLC identified

Avago Technologies

(

AVGO

) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Avago Technologies as such a stock due to the following factors:

  • AVGO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $414.6 million.
  • AVGO has traded 1.2 million shares today.
  • AVGO is trading at 1.56 times the normal volume for the stock at this time of day.
  • AVGO crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. 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 on. 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 AVGO:

Avago Technologies Limited designs, develops, and supplies semiconductor devices with a focus on analog III-V based products. The company operates through four segments: Wireless Communications, Wired Infrastructure, Enterprise Storage, and Industrial & Other segments. The stock currently has a dividend yield of 1.4%. AVGO has a PE ratio of 34. Currently there are 18 analysts that rate Avago Technologies a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Avago Technologies has been 3.7 million shares per day over the past 30 days. Avago has a market cap of $34.1 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.32 and a short float of 10.8% with 6.82 days to cover. Shares are up 20.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Avago Technologies as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, compelling growth in net income, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 13.4%. Since the same quarter one year prior, revenues rose by 36.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, AVAGO TECHNOLOGIES LTD's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 246.3% when compared to the same quarter one year prior, rising from -$164.00 million to $240.00 million.
  • Net operating cash flow has significantly increased by 88.53% to $592.00 million when compared to the same quarter last year. In addition, AVAGO TECHNOLOGIES LTD has also vastly surpassed the industry average cash flow growth rate of -84.30%.
  • The gross profit margin for AVAGO TECHNOLOGIES LTD is rather high; currently it is at 63.40%. 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 13.83% trails the industry average.

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