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

  • AMCC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.5 million.
  • AMCC has traded 370,664 shares today.
  • AMCC is trading at 2.61 times the normal volume for the stock at this time of day.
  • AMCC is trading at a new high 4.01% 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 AMCC:

Applied Micro Circuits Corporation provides silicon solutions for next-generation cloud infrastructure and data centers; and connectivity products for edge, metro, and long haul communications equipment in the United States and internationally. Currently there are 2 analysts that rate Applied Micro Circuits a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Applied Micro Circuits has been 823,600 shares per day over the past 30 days. Applied Micro Circuits has a market cap of $564.4 million and is part of the technology sector and electronics industry. The stock has a beta of 2.15 and a short float of 14% with 7.91 days to cover. Shares are up 6.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Applied Micro Circuits as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • 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 165.5% when compared to the same quarter one year ago, falling from $23.12 million to -$15.15 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, APPLIED MICRO CIRCUITS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 41.03%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 163.33% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • APPLIED MICRO CIRCUITS CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, APPLIED MICRO CIRCUITS CORP reported poor results of -$0.66 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings (-$0.11 versus -$0.66).
  • AMCC, with its decline in revenue, underperformed when compared the industry average of 0.7%. Since the same quarter one year prior, revenues fell by 28.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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