Trade-Ideas: Analog Devices (ADI) Is Today's "Barbarian At The Gate" Stock
Trade-Ideas LLC identified
(
) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Analog Devices as such a stock due to the following factors:
- ADI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $122.4 million.
- ADI has traded 1.6 million shares today.
- ADI traded in a range 265.7% of the normal price range with a price range of $3.03.
- ADI traded above its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.
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More details on ADI:
Analog Devices, Inc. designs, manufactures, and markets a portfolio of solutions that leverage analog, mixed-signal, and digital signal processing technology, including integrated circuits (ICs), algorithms, software, and subsystems. The stock currently has a dividend yield of 3%. ADI has a PE ratio of 26. Currently there are 14 analysts that rate Analog Devices a buy, no analysts rate it a sell, and 8 rate it a hold.
The average volume for Analog Devices has been 1.9 million shares per day over the past 30 days. Analog Devices has a market cap of $17.2 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.22 and a short float of 1.4% with 2.04 days to cover. Shares are up 0.1% year-to-date as of the close of trading on Tuesday.
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Analysis:
rates Analog Devices as a
. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, notable return on equity and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 7.01, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has increased to $219.71 million or 30.27% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.32%.
- 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 on the basis of return on equity, ANALOG DEVICES has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- ANALOG DEVICES's earnings per share declined by 8.8% 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, ANALOG DEVICES increased its bottom line by earning $2.20 versus $1.98 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $2.20).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 0.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full Analog Devices Ratings Report.
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