Strong On High Volume: Immersion (IMMR)

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

  • IMMR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.2 million.
  • IMMR has traded 100,159 shares today.
  • IMMR is trading at 6.76 times the normal volume for the stock at this time of day.
  • IMMR is trading at a new high 4.06% 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 IMMR:

Immersion Corporation, an intellectual property and software licensing company, creates, designs, develops, and licenses technologies in North America, Europe, Asia, and internationally. IMMR has a PE ratio of 79.1. Currently there are 3 analysts that rate Immersion a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Immersion has been 254,900 shares per day over the past 30 days. Immersion has a market cap of $310.1 million and is part of the technology sector and computer software & services industry. The stock has a beta of 0.51 and a short float of 7% with 6.00 days to cover. Shares are up 16.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Immersion as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • IMMR's revenue growth trails the industry average of 33.7%. Since the same quarter one year prior, revenues rose by 12.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • IMMR 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 4.80, which clearly demonstrates the ability to cover short-term cash needs.
  • IMMERSION CORP 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. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, IMMERSION CORP reported lower earnings of $0.15 versus $1.36 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus $0.15).
  • 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 Computers & Peripherals industry. The net income has significantly decreased by 97.3% when compared to the same quarter one year ago, falling from $37.40 million to $1.02 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. In comparison to the other companies in the Computers & Peripherals industry and the overall market, IMMERSION CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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