Trade-Ideas LLC identified

PMC-Sierra

(

PMCS

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

  • PMCS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.4 million.
  • PMCS has traded 259,449 shares today.
  • PMCS is trading at 2.63 times the normal volume for the stock at this time of day.
  • PMCS is trading at a new high 3.02% 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 PMCS:

PMC-Sierra, Inc. designs, develops, markets, and supports semiconductor solutions for communications network infrastructure equipment worldwide. Its semiconductor devices enable networking equipment primarily in three markets, including storage, optical, and mobile networks. PMCS has a PE ratio of 316. Currently there are 4 analysts that rate PMC-Sierra a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for PMC-Sierra has been 2.0 million shares per day over the past 30 days. PMC-Sierra has a market cap of $1.2 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.13 and a short float of 3.6% with 2.96 days to cover. Shares are down 31.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates PMC-Sierra as a

hold

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and unimpressive growth in net income.

Highlights from the ratings report include:

  • PMCS's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.10, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $33.38 million or 17.52% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -22.76%.
  • PMC-SIERRA INC 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, PMC-SIERRA INC turned its bottom line around by earning $0.00 versus -$0.16 in the prior year. This year, the market expects an increase in earnings to $0.46 from $0.00.
  • The share price of PMC-SIERRA INC has not done very well: it is down 19.24% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • 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 146.5% when compared to the same quarter one year ago, falling from -$3.48 million to -$8.58 million.

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