NVIDIA (NVDA) Highlighted As Weak On High Volume

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

  • NVDA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $143.2 million.
  • NVDA has traded 4.1 million shares today.
  • NVDA is trading at 13.52 times the normal volume for the stock at this time of day.
  • NVDA is trading at a new low 7.03% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 NVDA:

NVIDIA Corporation operates as a visual computing company in the United States, Taiwan, China, the rest of Asia Pacific, Europe, and other Americas. The company operates through two segments, GPU and Tegra Processors. The stock currently has a dividend yield of 1.5%. NVDA has a PE ratio of 19.7. Currently there are 9 analysts that rate NVIDIA a buy, 3 analysts rate it a sell, and 11 rate it a hold.

The average volume for NVIDIA has been 7.1 million shares per day over the past 30 days. NVIDIA has a market cap of $12.2 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.40 and a short float of 12.3% with 8.07 days to cover. Shares are up 10.2% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates NVIDIA as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • NVDA's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 9.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 5.69, which clearly demonstrates the ability to cover short-term cash needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • NVIDIA CORP has improved earnings per share by 40.0% 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. During the past fiscal year, NVIDIA CORP increased its bottom line by earning $1.12 versus $0.74 in the prior year. This year, the market expects an improvement in earnings ($1.19 versus $1.12).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income increased by 31.4% when compared to the same quarter one year prior, rising from $146.92 million to $193.13 million.

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