Trade-Ideas LLC identified

Microsemi

(

MSCC

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

  • MSCC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.1 million.
  • MSCC has traded 167,361 shares today.
  • MSCC traded in a range 204.7% of the normal price range with a price range of $1.57.
  • MSCC traded above its daily resistance level (quality: 120 days, meaning that the stock is crossing a resistance level set by the last 120 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 MSCC:

Microsemi Corporation designs, manufactures, and markets analog and mixed-signal semiconductor solutions in the United States, Europe, and Asia. Currently there are 9 analysts that rate Microsemi a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Microsemi has been 935,900 shares per day over the past 30 days. Microsemi has a market cap of $4.1 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.02 and a short float of 12% with 10.45 days to cover. Shares are up 11.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Microsemi as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 14.8%. Since the same quarter one year prior, revenues rose by 50.0%. 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.
  • After a year of stock price fluctuations, the net result is that MSCC's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 952.0% when compared to the same quarter one year ago, falling from $24.88 million to -$212.00 million.
  • Net operating cash flow has significantly decreased to -$55.90 million or 180.42% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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