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 Advanced Micro Devices ( AMD) 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 Advanced Micro Devices as such a stock due to the following factors:
- AMD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $151.0 million.
- AMD has traded 71.4 million shares today.
- AMD is trading at 3.94 times the normal volume for the stock at this time of day.
- AMD 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. EXCLUSIVE OFFER: Get the inside scoop on opportunities in AMD with the Ticky from Trade-Ideas. See the FREE profile for AMD NOW at Trade-Ideas More details on AMD: Advanced Micro Devices, Inc. operates as a semiconductor company worldwide. It operates in two segments, Computing Solutions and Graphics. Currently there are 6 analysts that rate Advanced Micro Devices a buy, 4 analysts rate it a sell, and 9 rate it a hold. The average volume for Advanced Micro Devices has been 23.4 million shares per day over the past 30 days. Advanced Micro Devices has a market cap of $3.0 billion and is part of the technology sector and electronics industry. The stock has a beta of 2.26 and a short float of 20% with 2.95 days to cover. Shares are up 7.8% year-to-date as of the close of trading on Tuesday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates Advanced Micro Devices as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally high debt management risk. Highlights from the ratings report include:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, ADVANCED MICRO DEVICES's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio is very high at 4.72 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, AMD's quick ratio is somewhat strong at 1.10, demonstrating the ability to handle short-term liquidity needs.
- ADVANCED MICRO DEVICES reported significant earnings per share improvement 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, ADVANCED MICRO DEVICES swung to a loss, reporting -$1.59 versus $0.65 in the prior year. This year, the market expects an improvement in earnings (-$0.12 versus -$1.59).
- 39.22% is the gross profit margin for ADVANCED MICRO DEVICES 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, AMD's net profit margin of 3.28% significantly trails the industry average.
- Net operating cash flow has significantly increased by 108.75% to $21.00 million when compared to the same quarter last year. In addition, ADVANCED MICRO DEVICES has also vastly surpassed the industry average cash flow growth rate of -24.53%.
- You can view the full Advanced Micro Devices Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.