Strong On High Volume: Harmonic (HLIT)

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

  • HLIT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.2 million.
  • HLIT has traded 99,294 shares today.
  • HLIT is trading at 4.09 times the normal volume for the stock at this time of day.
  • HLIT is trading at a new high 3.01% 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 HLIT:

Harmonic Inc. designs, manufactures, and sells video infrastructure products and system solutions worldwide. Currently there are no analysts that rate Harmonic a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Harmonic has been 638,000 shares per day over the past 30 days. Harmonic has a market cap of $613.8 million and is part of the technology sector and telecommunications industry. The stock has a beta of 1.61 and a short float of 6.8% with 5.55 days to cover. Shares are down 5.3% year-to-date as of the close of trading on Monday.

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 Harmonic 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • HLIT 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. To add to this, HLIT has a quick ratio of 1.97, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for HARMONIC INC is rather high; currently it is at 56.87%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HLIT's net profit margin of 0.99% significantly trails the industry average.
  • HLIT, with its decline in revenue, slightly underperformed the industry average of 5.6%. Since the same quarter one year prior, revenues fell by 12.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has significantly decreased to $0.74 million or 95.37% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 Communications Equipment industry and the overall market, HARMONIC 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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