Strong And Under The Radar Today: AU Optronics (AUO)

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 AU Optronics ( AUO) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified AU Optronics as such a stock due to the following factors:

  • AUO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.0 million.
  • AUO is making at least a new 3-day high.
  • AUO has a PE ratio of 34.4.
  • AUO is mentioned 0.97 times per day on StockTwits.
  • AUO has not yet been mentioned on StockTwits today.
  • AUO is currently in the upper 20% of its 1-year range.
  • AUO is in the upper 35% of its 20-day range.
  • AUO is in the upper 45% of its 5-day range.
  • AUO is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on AUO:

AU Optronics Corp. is engaged in the design, development, production, assembly, and marketing of thin film transistor liquid crystal displays and other flat panel displays. The company operates in two segments, Display and Solar. The stock currently has a dividend yield of 0.1%. AUO has a PE ratio of 34.4. Currently there is 1 analyst that rates AU Optronics a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for AU Optronics has been 661,800 shares per day over the past 30 days. AU Optronics has a market cap of $4.6 billion and is part of the technology sector and electronics industry. Shares are up 54.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates AU Optronics as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 177.77% and other important driving factors, this stock has surged by 57.09% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
  • AU OPTRONICS CORP 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, AU OPTRONICS CORP turned its bottom line around by earning $0.13 versus -$2.12 in the prior year. This year, the market expects an improvement in earnings ($0.55 versus $0.13).
  • AUO, with its decline in revenue, underperformed when compared the industry average of 2.5%. Since the same quarter one year prior, revenues slightly dropped by 8.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, AU OPTRONICS CORP's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for AU OPTRONICS CORP is currently lower than what is desirable, coming in at 27.48%. Regardless of AUO's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.02% trails 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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