Trade-Ideas: PDF Solutions (PDFS) Is Today's Strong On High Relative Volume Stock

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

  • PDFS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.8 million.
  • PDFS has traded 51,631 shares today.
  • PDFS is trading at 2.80 times the normal volume for the stock at this time of day.
  • PDFS is trading at a new high 3.39% 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 PDFS:

PDF Solutions, Inc. provides infrastructure technologies and services to enhance yield and optimize performance of integrated circuits (IC) in Asia, Europe and North America. PDFS has a PE ratio of 22.4. Currently there are 3 analysts that rate PDF Solutions a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for PDF Solutions has been 258,600 shares per day over the past 30 days. PDF has a market cap of $429.9 million and is part of the technology sector and computer software & services industry. The stock has a beta of 1.69 and a short float of 2.7% with 4.48 days to cover. Shares are down 45.5% 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 PDF Solutions as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • PDFS 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. Along with this, the company maintains a quick ratio of 13.80, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $9.46 million or 43.76% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.94%.
  • The gross profit margin for PDF SOLUTIONS INC is rather high; currently it is at 58.93%. Regardless of PDFS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PDFS's net profit margin of 7.85% is significantly lower than 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 63.5% when compared to the same quarter one year ago, falling from $4.82 million to $1.76 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. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, PDF SOLUTIONS INC's return on equity is below 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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