Analog Devices (ADI) Strong On High Relative Volume Today

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

  • ADI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $146.3 million.
  • ADI has traded 861,883 shares today.
  • ADI is trading at 8.89 times the normal volume for the stock at this time of day.
  • ADI 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 ADI:

Analog Devices, Inc. engages in the design, manufacture, and marketing of analog, mixed-signal, and digital signal processing integrated circuits (ICs) for use in industrial, automotive, consumer, and communication markets worldwide. The stock currently has a dividend yield of 2.5%. ADI has a PE ratio of 31. Currently there are 11 analysts that rate Analog Devices a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Analog Devices has been 2.1 million shares per day over the past 30 days. Analog Devices has a market cap of $19.7 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.21 and a short float of 2.1% with 3.29 days to cover. Shares are up 14.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Analog Devices 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, increase in net income and good cash flow from operations. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.0%. Since the same quarter one year prior, revenues rose by 22.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ADI's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 5.18, which clearly demonstrates the ability to cover short-term cash needs.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Semiconductors & Semiconductor Equipment industry average. The net income increased by 17.1% when compared to the same quarter one year prior, going from $152.59 million to $178.76 million.
  • Net operating cash flow has slightly increased to $168.65 million or 7.09% when compared to the same quarter last year. Despite an increase in cash flow, ANALOG DEVICES's average is still marginally south of the industry average growth rate of 14.84%.

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