Applied Optoelectronics (AAOI) Is Weak 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 Applied Optoelectronics ( AAOI) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Applied Optoelectronics as such a stock due to the following factors:

  • AAOI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.6 million.
  • AAOI has traded 65,744 shares today.
  • AAOI is trading at 2.26 times the normal volume for the stock at this time of day.
  • AAOI is trading at a new low 3.05% 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in AAOI with the Ticky from Trade-Ideas. See the FREE profile for AAOI NOW at Trade-Ideas

More details on AAOI:

Applied Optoelectronics, Inc. designs and manufactures optical communications products for Internet data center, cable television (CATV), and fiber-to-the-home markets. AAOI has a PE ratio of 85. Currently there are 6 analysts that rate Applied Optoelectronics a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Applied Optoelectronics has been 257,300 shares per day over the past 30 days. Applied Optoelectronics has a market cap of $278.8 million and is part of the technology sector and electronics industry. Shares are up 66.3% year-to-date as of the close of trading on Thursday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Applied Optoelectronics as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 21.6%. 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.
  • 39.64% is the gross profit margin for APPLIED OPTOELECTRONICS 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 -2.23% is in-line with the industry average.
  • Compared to other companies in the Communications Equipment industry and the overall market on the basis of return on equity, APPLIED OPTOELECTRONICS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The share price of APPLIED OPTOELECTRONICS INC has not done very well: it is down 18.01% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • Net operating cash flow has significantly decreased to -$13.80 million or 1321.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

More from Markets

Billionaire Investor Tim Draper Explains Why Bitcoin Will Hit $250,000 in 2022

Billionaire Investor Tim Draper Explains Why Bitcoin Will Hit $250,000 in 2022

To Think a Trade War's Still Just a Threat Is the Dumbest Thing on Wall Street

To Think a Trade War's Still Just a Threat Is the Dumbest Thing on Wall Street

M&A Trends Still on Investors' Minds Despite Worries Over Tariffs -- ICYMI

M&A Trends Still on Investors' Minds Despite Worries Over Tariffs -- ICYMI

Dow Falls as U.S. Imposes Tariffs on $50 Billion of Chinese Goods

Dow Falls as U.S. Imposes Tariffs on $50 Billion of Chinese Goods

General Motors Spikes on Report It's Considering Listing Shares of Cruise Unit

General Motors Spikes on Report It's Considering Listing Shares of Cruise Unit