Trade-Ideas LLC identified

Synnex

(

SNX

) 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 Synnex as such a stock due to the following factors:

  • SNX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $59.6 million.
  • SNX has traded 154,847 shares today.
  • SNX is trading at 1.70 times the normal volume for the stock at this time of day.
  • SNX 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 SNX:

SYNNEX Corporation provides business process services to resellers, retailers, and original equipment manufacturers in the United States, Japan, and internationally. It operates in two segments, Technology Solutions and Concentrix. The stock currently has a dividend yield of 0.9%. SNX has a PE ratio of 17. Currently there is 1 analyst that rates Synnex a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Synnex has been 286,200 shares per day over the past 30 days. Synnex has a market cap of $3.4 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.16 and a short float of 8.6% with 2.75 days to cover. Shares are down 5.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Synnex as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 25.12% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SNX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • SYNNEX CORP has improved earnings per share by 6.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SYNNEX CORP increased its bottom line by earning $4.58 versus $2.98 in the prior year. This year, the market expects an improvement in earnings ($6.25 versus $4.58).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Electronic Equipment, Instruments & Components industry average. The net income increased by 7.1% when compared to the same quarter one year prior, going from $44.99 million to $48.17 million.
  • The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.13, which illustrates the ability to avoid short-term cash problems.

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