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 or Stephanie Link.
Trade-Ideas LLC identified
) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Broadcom as such a stock due to the following factors:
- BRCM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $261.5 million.
- BRCM has a PE ratio of 55.4.
- BRCM is currently in the upper 30% of its 1-year range.
- BRCM is in the upper 25% of its 20-day range.
- BRCM is in the upper 35% of its 5-day range.
- BRCM is currently trading above yesterday's high.
- BRCM has experienced a gap between today's open and yesterday's close of 1.2%.
'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.
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More details on BRCM:
Broadcom Corporation provides semiconductor solutions for wired and wireless communications. Its products offer voice, video, data, and multimedia connectivity in the home, office, and mobile environments. The stock currently has a dividend yield of 1.2%. BRCM has a PE ratio of 55.4. Currently there are 21 analysts that rate Broadcom a buy, 1 analyst rates it a sell, and 7 rate it a hold.
The average volume for Broadcom has been 5.6 million shares per day over the past 30 days. Broadcom has a market cap of $21.9 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.01 and a short float of 2.2% with 1.84 days to cover. Shares are up 36% year-to-date as of the close of trading on Wednesday.
rates Broadcom as a
. 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, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- BRCM's revenue growth trails the industry average of 17.7%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- BRCM's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, BRCM has a quick ratio of 2.49, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for BROADCOM CORP is rather high; currently it is at 56.24%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, BRCM's net profit margin of 4.33% significantly trails the industry average.
- Compared to its closing price of one year ago, BRCM's share price has jumped by 49.35%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- BROADCOM CORP 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. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, BROADCOM CORP reported lower earnings of $0.74 versus $1.24 in the prior year. This year, the market expects an improvement in earnings ($2.92 versus $0.74).
- You can view the full Broadcom Ratings Report.