M/A-COM Technology Solutions Holdings (MTSI): Today's Weak On High Volume Stock

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 M/A-COM Technology Solutions Holdings ( MTSI) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified M/A-COM Technology Solutions Holdings as such a stock due to the following factors:

  • MTSI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $10.7 million.
  • MTSI has traded 54,784 shares today.
  • MTSI is trading at 2.27 times the normal volume for the stock at this time of day.
  • MTSI is trading at a new low 3.18% 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 MTSI:

M/A-COM Technology Solutions Holdings, Inc., through its subsidiaries, designs, develops, manufactures, and markets semiconductors and modules for use in wireless and wireline applications across the radio frequency, microwave, and millimeterwave spectrum. MTSI has a PE ratio of 623. Currently there are 7 analysts that rate M/A-COM Technology Solutions Holdings a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for M/A-COM Technology Solutions Holdings has been 432,400 shares per day over the past 30 days. M/A-COM Technology has a market cap of $2.0 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.01 and a short float of 21.8% with 11.02 days to cover. Shares are up 19.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates M/A-COM Technology Solutions Holdings as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.5%. Since the same quarter one year prior, revenues rose by 15.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.98, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, MTSI has a quick ratio of 2.40, which demonstrates the ability of the company to cover short-term liquidity needs.
  • M/A-COM TECHNOLOGY SOLUTIONS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, M/A-COM TECHNOLOGY SOLUTIONS swung to a loss, reporting -$0.25 versus $0.39 in the prior year. This year, the market expects an improvement in earnings ($1.63 versus -$0.25).
  • Powered by its strong earnings growth of 76.19% and other important driving factors, this stock has surged by 117.81% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, M/A-COM TECHNOLOGY SOLUTIONS's return on equity significantly trails that of both the industry average and the S&P 500.

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