Trade-Ideas LLC identified

Sigma Designs

(

SIGM

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

  • SIGM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.0 million.
  • SIGM has traded 385,169 shares today.
  • SIGM is trading at 17.73 times the normal volume for the stock at this time of day.
  • SIGM is trading at a new low 3.01% 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 SIGM:

Sigma Designs, Inc., an integrated semiconductor solutions provider, provides intelligent media platforms for use in the home entertainment and home control markets. Currently there are 5 analysts that rate Sigma Designs a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Sigma Designs has been 636,400 shares per day over the past 30 days. Sigma Designs has a market cap of $388.8 million and is part of the technology sector and electronics industry. The stock has a beta of 0.57 and a short float of 5% with 3.51 days to cover. Shares are up 43.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Sigma Designs as a

hold

. 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 and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:

  • SIGM's very impressive revenue growth greatly exceeded the industry average of 11.5%. Since the same quarter one year prior, revenues leaped by 51.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SIGM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, SIGM has a quick ratio of 2.28, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SIGMA DESIGNS INC reported significant earnings per share improvement in the most recent quarter compared to 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, SIGMA DESIGNS INC reported poor results of -$0.63 versus -$0.32 in the prior year. This year, the market expects an improvement in earnings ($0.26 versus -$0.63).
  • The gross profit margin for SIGMA DESIGNS INC is rather high; currently it is at 61.96%. Regardless of SIGM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SIGM's net profit margin of -0.68% significantly underperformed when compared to the industry average.
  • 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 Semiconductors & Semiconductor Equipment industry and the overall market, SIGMA DESIGNS INC's return on equity significantly trails that of both the industry average and the S&P 500.

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