Weak On High Volume: Sierra Wireless (SWIR)

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 Sierra Wireless ( SWIR) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Sierra Wireless as such a stock due to the following factors:

  • SWIR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.5 million.
  • SWIR has traded 528,750 shares today.
  • SWIR is trading at 11.73 times the normal volume for the stock at this time of day.
  • SWIR is trading at a new low 9.02% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on SWIR:

Sierra Wireless, Inc., together with its subsidiaries, provides cellular wireless solutions to the machine-to-machine (M2M) and connected device markets in North America, Europe, and the Asia Pacific. Currently there are no analysts that rate Sierra Wireless a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Sierra Wireless has been 516,600 shares per day over the past 30 days. Sierra Wireless has a market cap of $884.5 million and is part of the technology sector and telecommunications industry. Shares are up 16.5% year-to-date as of the close of trading on Wednesday.

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 Sierra Wireless as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 23.2%. 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 its closing price of one year ago, SWIR's share price has jumped by 113.34%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 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. Compared to other companies in the Communications Equipment industry and the overall market, SIERRA WIRELESS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for SIERRA WIRELESS INC is currently lower than what is desirable, coming in at 32.09%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -6.10% is significantly below that of the industry average.

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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