Trade-Ideas: Marvell Technology Group (MRVL) Is Today's

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 Marvell Technology Group ( MRVL) 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 Marvell Technology Group as such a stock due to the following factors:

  • MRVL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $72.9 million.
  • MRVL has traded 4.5 million shares today.
  • MRVL traded in a range 268.1% of the normal price range with a price range of $0.92.
  • MRVL traded below its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 MRVL:

In 2006 bought Intel's Communications and Application Processor business for $600; Avago Technologies printer semiconductor business for $275, and UTStarcom's semiconductor design business for $40. The stock currently has a dividend yield of 1.5%. MRVL has a PE ratio of 30.3. Currently there are 9 analysts that rate Marvell Technology Group a buy, 3 analysts rate it a sell, and 7 rate it a hold.

The average volume for Marvell Technology Group has been 5.8 million shares per day over the past 30 days. Marvell Technology Group has a market cap of $7.8 billion and is part of the technology sector and electronics industry. The stock has a beta of 0.74 and a short float of 2.2% with 1.60 days to cover. Shares are up 12.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Marvell Technology Group as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 19.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MRVL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.00, which clearly demonstrates the ability to cover short-term cash needs.
  • MARVELL TECHNOLOGY GROUP LTD 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, MARVELL TECHNOLOGY GROUP LTD reported lower earnings of $0.53 versus $0.98 in the prior year. This year, the market expects an improvement in earnings ($0.99 versus $0.53).
  • The gross profit margin for MARVELL TECHNOLOGY GROUP LTD is rather high; currently it is at 52.85%. Regardless of MRVL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.07% trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, MARVELL TECHNOLOGY GROUP LTD's return on equity is below that of both the industry average and the S&P 500.

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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