Trade-Ideas LLC identified

Fabrinet

(

FN

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

  • FN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.0 million.
  • FN has traded 71,724 shares today.
  • FN is trading at 9.51 times the normal volume for the stock at this time of day.
  • FN is trading at a new low 4.05% 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 FN:

Fabrinet provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services to original equipment manufacturers of optical communication components, modules and sub-systems, industrial lasers, medical devices, and sensors. FN has a PE ratio of 16. Currently there are 6 analysts that rate Fabrinet a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Fabrinet has been 175,800 shares per day over the past 30 days. Fabrinet has a market cap of $675.9 million and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 0.98 and a short float of 2.2% with 4.06 days to cover. Shares are up 7.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Fabrinet as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 6.6%. Since the same quarter one year prior, revenues rose by 29.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • FN's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, FN has a quick ratio of 2.16, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 30.70% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, FN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 26.1% when compared to the same quarter one year prior, rising from $10.33 million to $13.04 million.

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