Trade-Ideas: Avnet (AVT) 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 Avnet ( AVT) 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 Avnet as such a stock due to the following factors:

  • AVT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $35.1 million.
  • AVT has traded 1.1 million shares today.
  • AVT traded in a range 240.3% of the normal price range with a price range of $2.02.
  • AVT traded above its daily resistance level (quality: 53 days, meaning that the stock is crossing a resistance level set by the last 53 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 AVT:

Avnet, Inc., together with its subsidiaries, distributes electronic components, enterprise computer and storage products, and embedded subsystems in the Americas, Europe, the Middle East, Africa, Asia, Australia, and New Zealand. The stock currently has a dividend yield of 1.4%. AVT has a PE ratio of 13.1. Currently there are 5 analysts that rate Avnet a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Avnet has been 803,900 shares per day over the past 30 days. Avnet has a market cap of $5.9 billion and is part of the services sector and wholesale industry. The stock has a beta of 1.41 and a short float of 1.6% with 2.80 days to cover. Shares are down 2.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Avnet as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • AVT's revenue growth has slightly outpaced the industry average of 2.7%. Since the same quarter one year prior, revenues rose by 10.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • AVNET INC's earnings per share declined by 10.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, AVNET INC reported lower earnings of $3.22 versus $3.79 in the prior year. This year, the market expects an improvement in earnings ($4.34 versus $3.22).
  • Despite currently having a low debt-to-equity ratio of 0.47, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.19 is sturdy.

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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