Giga-tronics (GIGA) Is Strong On High 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 Giga-tronics ( GIGA) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Giga-tronics as such a stock due to the following factors:

  • GIGA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.8 million.
  • GIGA has traded 114,740 shares today.
  • GIGA is trading at 4.81 times the normal volume for the stock at this time of day.
  • GIGA is trading at a new high 3.10% 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 GIGA:

Giga-tronics Incorporated, together with its subsidiaries, designs, manufactures, and markets a range of test and measurement equipment used in the development, testing, and maintenance of wireless communications products and systems. GIGA has a PE ratio of 27.

The average volume for Giga-tronics has been 517,400 shares per day over the past 30 days. Giga-tronics has a market cap of $14.9 million and is part of the technology sector and electronics industry. The stock has a beta of -0.33 and a short float of 0.5% with 0.00 days to cover. Shares are up 60.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Giga-tronics as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 2.36 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, GIGA has a quick ratio of 0.64, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly decreased to -$1.06 million or 489.33% 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 company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electronic Equipment, Instruments & Components industry and the overall market, GIGA-TRONICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 43.38% is the gross profit margin for GIGA-TRONICS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.48% trails the industry average.
  • This stock has increased by 75.00% 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 GIGA 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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