Strong On High Relative Volume: AVG Technologies (AVG)

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

  • AVG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.8 million.
  • AVG has traded 61,685 shares today.
  • AVG is trading at 4.73 times the normal volume for the stock at this time of day.
  • AVG is trading at a new high 3.03% 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 AVG:

AVG Technologies N.V. develops and sells Internet security software and online service solutions under the AVG brand name. Its product portfolio includes Internet security, PC performance optimization, online backup, mobile security, identity protection, and family safety software. AVG has a PE ratio of 17.4. Currently there is 1 analyst that rates AVG Technologies a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for AVG Technologies has been 316,100 shares per day over the past 30 days. AVG has a market cap of $997.6 million and is part of the technology sector and computer software & services industry. The stock has a beta of 0.16 and a short float of 8.5% with 8.01 days to cover. Shares are up 15.1% 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 AVG Technologies as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, impressive record of earnings per share growth, increase in net income, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.
  • AVG TECHNOLOGIES NV reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, AVG TECHNOLOGIES NV increased its bottom line by earning $1.16 versus $0.84 in the prior year. This year, the market expects an improvement in earnings ($1.89 versus $1.16).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 283.3% when compared to the same quarter one year prior, rising from $4.75 million to $18.21 million.
  • The gross profit margin for AVG TECHNOLOGIES NV is currently very high, coming in at 96.41%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 19.72% trails the industry average.
  • AVG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.35 is very weak and demonstrates a lack of ability to pay short-term obligations.

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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