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.
Trade-Ideas LLC identified
) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Lam Research as such a stock due to the following factors:
- LRCX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $151.0 million.
- LRCX has traded 994,198 shares today.
- LRCX is trading at 2.06 times the normal volume for the stock at this time of day.
- LRCX crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.
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More details on LRCX:
Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing systems used in the fabrication of integrated circuits. The stock currently has a dividend yield of 0.9%. LRCX has a PE ratio of 19.4. Currently there are 12 analysts that rate Lam Research a buy, no analysts rate it a sell, and 1 rates it a hold.
The average volume for Lam Research has been 1.8 million shares per day over the past 30 days. Lam Research has a market cap of $12.5 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.26 and a short float of 6% with 4.21 days to cover. Shares are down 0.7% year-to-date as of the close of trading on Tuesday.
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rates Lam Research as a
. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the ratings report include:
- 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 44.88% 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, LRCX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- LAM RESEARCH CORP has improved earnings per share by 14.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LAM RESEARCH CORP increased its bottom line by earning $3.68 versus $0.67 in the prior year. This year, the market expects an improvement in earnings ($4.81 versus $3.68).
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.5%. Since the same quarter one year prior, revenues rose by 10.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- LRCX's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, LRCX has a quick ratio of 2.24, which demonstrates the ability of the company to cover short-term liquidity needs.
- You can view the full Lam Research Ratings Report.