MaxLinear (MXL) Is Today's Strong 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 MaxLinear ( MXL) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified MaxLinear as such a stock due to the following factors:

  • MXL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.4 million.
  • MXL has traded 81,750 shares today.
  • MXL is trading at 7.36 times the normal volume for the stock at this time of day.
  • MXL is trading at a new high 4.06% 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 MXL:

MaxLinear, Inc. provides integrated, radio-frequency (RF) and mixed-signal circuits for broadband communication and data center, metro, and long-haul transport network applications worldwide. Currently there are 4 analysts that rate MaxLinear a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for MaxLinear has been 274,500 shares per day over the past 30 days. MaxLinear has a market cap of $320.5 million and is part of the technology sector and electronics industry. The stock has a beta of 0.56 and a short float of 7.6% with 5.47 days to cover. Shares are up 36.4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates MaxLinear as a hold. 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 and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.

Highlights from the ratings report include:
  • MXL's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 8.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • MXL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, MXL has a quick ratio of 2.15, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 447.8% when compared to the same quarter one year ago, falling from -$0.86 million to -$4.72 million.
  • Net operating cash flow has declined marginally to $3.77 million or 7.89% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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