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

Ruckus Wireless

(

RKUS

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

  • RKUS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $10.4 million.
  • RKUS has traded 283,972 shares today.
  • RKUS is trading at 4.49 times the normal volume for the stock at this time of day.
  • RKUS is trading at a new low 3.05% 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 RKUS:

Ruckus Wireless, Inc. provides carrier-class Wi-Fi solutions to service providers and enterprises worldwide. It provides gateways, controllers, and access points with related software and services. RKUS has a PE ratio of 12. Currently there are 8 analysts that rate Ruckus Wireless a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Ruckus Wireless has been 1.5 million shares per day over the past 30 days. Ruckus Wireless has a market cap of $936.6 million and is part of the technology sector and computer hardware industry. The stock has a beta of 0.59 and a short float of 9.9% with 7.91 days to cover. Shares are down 10% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Ruckus Wireless as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income and weak operating cash flow.

Highlights from the ratings report include:

  • 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 Communications Equipment industry. The net income has significantly decreased by 309.9% when compared to the same quarter one year ago, falling from $0.27 million to -$0.57 million.
  • Net operating cash flow has significantly decreased to -$5.31 million or 249.17% 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. Compared to other companies in the Communications Equipment industry and the overall market on the basis of return on equity, RUCKUS WIRELESS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • This stock has managed to rise its share value by 14.60% over the past twelve months. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
  • RUCKUS WIRELESS INC's earnings have gone downhill when comparing its most recently reported quarter with the same quarter a year earlier. 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, RUCKUS WIRELESS INC increased its bottom line by earning $0.09 versus $0.02 in the prior year. This year, the market expects an improvement in earnings ($0.43 versus $0.09).

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