Strong On High Volume: Spansion (CODE)

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

  • CODE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $53.0 million.
  • CODE has traded 295,922 shares today.
  • CODE is trading at 2.15 times the normal volume for the stock at this time of day.
  • CODE is trading at a new high 3.02% 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 CODE:

Spansion, Inc. designs, manufactures, develops, and sells embedded systems semiconductors worldwide. The company offers flash memory, microcontrollers, mixed-signal and analog products, and embedded system-on-chip solutions. Currently there are 7 analysts that rate Spansion a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Spansion has been 1.9 million shares per day over the past 30 days. Spansion has a market cap of $1.3 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.66 and a short float of 15% with 3.03 days to cover. Shares are up 47.7% year-to-date as of the close of trading on Tuesday.

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

Highlights from the ratings report include:
  • CODE's very impressive revenue growth greatly exceeded the industry average of 18.9%. Since the same quarter one year prior, revenues leaped by 61.3%. 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, CODE's share price has jumped by 32.98%, 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.
  • 38.06% is the gross profit margin for SPANSION INC which we consider to be strong. Regardless of CODE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CODE's net profit margin of -3.80% significantly underperformed when compared to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 270.6% when compared to the same quarter one year ago, falling from -$3.23 million to -$11.97 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, SPANSION INC's return on equity significantly trails 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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