Trade-Ideas LLC identified

NeoPhotonics

(

NPTN

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

  • NPTN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.6 million.
  • NPTN has traded 137,353 shares today.
  • NPTN is trading at 2.23 times the normal volume for the stock at this time of day.
  • NPTN is trading at a new high 6.03% 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 NPTN:

NeoPhotonics Corporation designs and manufactures hybrid photonic integrated optoelectronic modules and subsystems for bandwidth-intensive, high-speed communications networks. NPTN has a PE ratio of 64. Currently there are 4 analysts that rate NeoPhotonics a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for NeoPhotonics has been 507,200 shares per day over the past 30 days. NeoPhotonics has a market cap of $389.4 million and is part of the technology sector and electronics industry. The stock has a beta of 0.62 and a short float of 7.9% with 4.00 days to cover. Shares are up 189.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates NeoPhotonics 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 impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 9.6%. Since the same quarter one year prior, revenues slightly increased by 2.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • NPTN's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, NPTN has a quick ratio of 1.64, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for NEOPHOTONICS CORP is currently lower than what is desirable, coming in at 34.39%. Regardless of NPTN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NPTN's net profit margin of 1.64% is significantly lower than the industry average.
  • Net operating cash flow has decreased to $5.99 million or 32.53% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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