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 Finisar Corporation ( FNSR) 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 Finisar Corporation as such a stock due to the following factors:
- FNSR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $65.1 million.
- FNSR has traded 3.0 million shares today.
- FNSR traded in a range 211.6% of the normal price range with a price range of $1.74.
- FNSR traded above its daily resistance level (quality: 13 days, meaning that the stock is crossing a resistance level set by the last 13 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. EXCLUSIVE OFFER: Get the inside scoop on opportunities in FNSR with the Ticky from Trade-Ideas. See the FREE profile for FNSR NOW at Trade-Ideas More details on FNSR: Finisar Corporation provides optical subsystems and components for data communication and telecommunication applications in the United States, Malaysia, China, and internationally. FNSR has a PE ratio of 42.9. Currently there are 10 analysts that rate Finisar Corporation a buy, no analysts rate it a sell, and 1 rates it a hold. The average volume for Finisar Corporation has been 2.2 million shares per day over the past 30 days. Finisar has a market cap of $2.3 billion and is part of the technology sector and computer hardware industry. The stock has a beta of 1.24 and a short float of 17.2% with 5.44 days to cover. Shares are up 0.4% year-to-date as of the close of trading on Thursday. 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 Finisar Corporation as a buy. 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, compelling growth in net income, expanding profit margins 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:
- The revenue growth came in higher than the industry average of 3.4%. Since the same quarter one year prior, revenues rose by 25.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- FNSR's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, FNSR has a quick ratio of 2.22, which demonstrates the ability of the company to cover short-term liquidity needs.
- 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 10957.2% when compared to the same quarter one year prior, rising from $0.27 million to $29.97 million.
- 41.03% is the gross profit margin for FINISAR 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, FNSR's net profit margin of 10.30% significantly trails the industry average.
- This stock has managed to rise its share value by 62.01% over the past twelve months. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- You can view the full Finisar Corporation 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.