Strong On High Volume: Infinera (INFN)

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 Infinera ( INFN) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Infinera as such a stock due to the following factors:

  • INFN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.6 million.
  • INFN has traded 724,043 shares today.
  • INFN is trading at 7.96 times the normal volume for the stock at this time of day.
  • INFN is trading at a new high 7.07% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 INFN:

Infinera Corporation provides optical transport networking (OTN) equipment, software, and services to communications service providers, Internet content providers, cable operators, and subsea network operators worldwide. Currently there are 5 analysts that rate Infinera a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Infinera has been 1.7 million shares per day over the past 30 days. Infinera has a market cap of $1.3 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 1.08 and a short float of 13.7% with 6.46 days to cover. Shares are up 5.6% year-to-date as of the close of trading on Friday.

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 Infinera as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.3%. Since the same quarter one year prior, revenues rose by 19.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although INFN's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.40, which clearly demonstrates the ability to cover short-term cash needs.
  • 46.40% is the gross profit margin for INFINERA 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, INFN's net profit margin of 2.88% significantly trails the industry average.
  • In its most recent trading session, INFN has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has decreased to $10.25 million or 42.80% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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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