Novatel Wireless (MIFI) Flagged As Strong 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 Novatel Wireless ( MIFI) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Novatel Wireless as such a stock due to the following factors:

  • MIFI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.4 million.
  • MIFI has traded 119,053 shares today.
  • MIFI is trading at 5.09 times the normal volume for the stock at this time of day.
  • MIFI is trading at a new high 5.14% 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 MIFI:

Novatel Wireless, Inc. provides wireless broadband access solutions for the mobile communications market worldwide. It operates in the Mobile Computing Products, and M2M Products and Solutions segments. Currently there are 2 analysts that rate Novatel Wireless a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Novatel Wireless has been 410,300 shares per day over the past 30 days. Novatel Wireless has a market cap of $244.6 million and is part of the technology sector and telecommunications industry. The stock has a beta of 0.63 and a short float of 4.1% with 2.06 days to cover. Shares are up 51.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Novatel Wireless as a sell. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • Net operating cash flow has significantly decreased to -$7.13 million or 232.21% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for NOVATEL WIRELESS INC is currently lower than what is desirable, coming in at 26.80%. Regardless of MIFI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MIFI's net profit margin of -14.62% significantly underperformed when compared to the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Communications Equipment industry and the overall market, NOVATEL WIRELESS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • MIFI's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that MIFI's debt-to-equity ratio is low, the quick ratio, which is currently 0.61, displays a potential problem in covering short-term cash needs.
  • This stock has increased by 193.97% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in MIFI do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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