Watch Out: Barbarians At The Gate For Advanced Micro Devices (AMD)

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 Advanced Micro Devices ( AMD) 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 Advanced Micro Devices as such a stock due to the following factors:

  • AMD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.2 million.
  • AMD has traded 16.5 million shares today.
  • AMD traded in a range 204.4% of the normal price range with a price range of $0.20.
  • AMD traded above its daily resistance level (quality: 1 day, meaning that the stock is crossing a resistance level set by the last 1 calendar day. 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 AMD:

Advanced Micro Devices, Inc. operates as a semiconductor company worldwide. It operates in two segments, Computing Solutions and Graphics and Visual Solutions. AMD has a PE ratio of 37.0. Currently there are 5 analysts that rate Advanced Micro Devices a buy, 4 analysts rate it a sell, and 10 rate it a hold.

The average volume for Advanced Micro Devices has been 21.1 million shares per day over the past 30 days. Advanced Micro Devices has a market cap of $2.0 billion and is part of the technology sector and electronics industry. The stock has a beta of 2.56 and a short float of 23.2% with 9.33 days to cover. Shares are down 35.9% 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 Advanced Micro Devices as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and weak operating cash flow.

Highlights from the ratings report include:
  • ADVANCED MICRO DEVICES has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ADVANCED MICRO DEVICES continued to lose money by earning -$0.11 versus -$1.59 in the prior year. This year, the market expects an improvement in earnings ($0.07 versus -$0.11).
  • AMD, with its decline in revenue, underperformed when compared the industry average of 18.7%. Since the same quarter one year prior, revenues slightly dropped by 2.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The share price of ADVANCED MICRO DEVICES has not done very well: it is down 24.65% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • Net operating cash flow has decreased to $18.00 million or 14.28% 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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