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.

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

  • UCTT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.6 million.
  • UCTT has traded 163,410 shares today.
  • UCTT is trading at 17.36 times the normal volume for the stock at this time of day.
  • UCTT is trading at a new high 7.24% 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 UCTT:

Ultra Clean Holdings, Inc. designs, develops, prototypes, engineers, manufactures, and tests subsystems tailored to specific steps in the semiconductor manufacturing process and manufacturing processes in other addressed industries primarily in North America, Asia, and Europe. UCTT has a PE ratio of 31.4. Currently there are 3 analysts that rate Ultra Clean Holdings a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Ultra Clean Holdings has been 177,800 shares per day over the past 30 days. Ultra Clean has a market cap of $179.8 million and is part of the technology sector and electronics industry. Shares are down 39% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ultra Clean Holdings as a hold. The company's strongest point has been its very decent return on equity which we feel should persist. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and poor profit margins.

Highlights from the ratings report include:
  • ULTRA CLEAN HOLDINGS INC 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, ULTRA CLEAN HOLDINGS INC increased its bottom line by earning $0.38 versus $0.36 in the prior year. This year, the market expects an improvement in earnings ($0.61 versus $0.38).
  • UCTT, with its decline in revenue, underperformed when compared the industry average of 1.4%. Since the same quarter one year prior, revenues fell by 13.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, ULTRA CLEAN HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 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 83.4% when compared to the same quarter one year ago, falling from $7.06 million to $1.17 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 37.91%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 83.33% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

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