Barbarian At The Gate: Synaptics (SYNA)

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 Synaptics ( SYNA) 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 Synaptics as such a stock due to the following factors:

  • SYNA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $32.3 million.
  • SYNA has traded 1.3 million shares today.
  • SYNA traded in a range 243.1% of the normal price range with a price range of $3.40.
  • SYNA traded above its daily resistance level (quality: 74 days, meaning that the stock is crossing a resistance level set by the last 74 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 SYNA:

Synaptics Incorporated develops, markets, and sells custom-designed human interface solutions for electronic devices and products primarily in China, South Korea, Taiwan, Japan, and the United States. SYNA has a PE ratio of 13.6. Currently there are 8 analysts that rate Synaptics a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Synaptics has been 1.2 million shares per day over the past 30 days. Synaptics has a market cap of $1.7 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.99 and a short float of 29.6% with 12.04 days to cover. Shares are down 6.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Synaptics as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • SYNA's very impressive revenue growth greatly exceeded the industry average of 10.4%. Since the same quarter one year prior, revenues leaped by 75.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SYNA's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.41, which clearly demonstrates the ability to cover short-term cash needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SYNAPTICS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 455.55% and other important driving factors, this stock has surged by 65.39% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SYNA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.

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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