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

Freescale Semiconductor

(

FSL

) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Freescale Semiconductor as such a stock due to the following factors:

  • FSL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $57.5 million.
  • FSL has traded 611,309 shares today.
  • FSL is trading at 2.52 times the normal volume for the stock at this time of day.
  • FSL crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on FSL:

Freescale Semiconductor, Ltd. provides embedded processing solutions for automotive, networking, industrial, and consumer markets worldwide. Currently there are 5 analysts that rate Freescale Semiconductor a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Freescale Semiconductor has been 1.6 million shares per day over the past 30 days. Freescale Semiconductor has a market cap of $6.1 billion and is part of the technology sector and electronics industry. The stock has a beta of 2.49 and a short float of 15.1% with 5.40 days to cover. Shares are up 27.5% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Freescale Semiconductor as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:

  • FSL's revenue growth has slightly outpaced the industry average of 9.4%. Since the same quarter one year prior, revenues rose by 14.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 57.89% and other important driving factors, this stock has surged by 39.19% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 48.62% is the gross profit margin for FREESCALE SEMICONDUCTOR LTD which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -2.04% is in-line with the industry average.
  • FREESCALE SEMICONDUCTOR LTD 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, FREESCALE SEMICONDUCTOR LTD reported poor results of -$0.81 versus -$0.42 in the prior year. This year, the market expects an improvement in earnings ($1.47 versus -$0.81).
  • Net operating cash flow has significantly decreased to $26.00 million or 62.85% when compared to the same quarter last year. Despite a decrease in cash flow FREESCALE SEMICONDUCTOR LTD is still fairing well by exceeding its industry average cash flow growth rate of -89.41%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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