JDS Uniphase Corp (CA (JDSU) Shows Signs Of Being Water-Logged And Getting Wetter

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 JDS Uniphase Corp (CA ( JDSU) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified JDS Uniphase Corp (CA as such a stock due to the following factors:

  • JDSU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.5 million.
  • JDSU has traded 2.7 million shares today.
  • JDSU traded in a range 219.1% of the normal price range with a price range of $0.63.
  • JDSU traded below its daily resistance level (quality: 16 days, meaning that the stock is crossing a resistance level set by the last 16 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on JDSU:

JDS Uniphase Corporation provides communications test and measurement solutions, and optical products for telecommunications service providers, wireless operators, cable operators, network-equipment manufacturers, and enterprises worldwide. JDSU has a PE ratio of 46.5. Currently there are 7 analysts that rate JDS Uniphase Corp (CA a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for JDS Uniphase Corp (CA has been 5.2 million shares per day over the past 30 days. JDS Uniphase Corp (CA has a market cap of $3.0 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 2.56 and a short float of 5.1% with 2.95 days to cover. Shares are up 1.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates JDS Uniphase Corp (CA as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • JDS UNIPHASE CORP reported significant earnings per share improvement 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 year. We feel that this trend should continue. During the past fiscal year, JDS UNIPHASE CORP turned its bottom line around by earning $0.24 versus -$0.11 in the prior year. This year, the market expects an improvement in earnings ($0.59 versus $0.24).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 102.6% when compared to the same quarter one year prior, rising from -$11.60 million to $0.30 million.
  • JDSU's revenue growth trails the industry average of 22.1%. Since the same quarter one year prior, revenues slightly increased by 1.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 49.86% is the gross profit margin for JDS UNIPHASE CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, JDSU's net profit margin of 0.06% significantly trails the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.43, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.92 is very high and demonstrates very strong liquidity.

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