Trade-Ideas: Tessera Technologies (TSRA) Is Today's Weak On High Relative Volume Stock

Trade-Ideas LLC identified Tessera Technologies ( TSRA) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Tessera Technologies as such a stock due to the following factors:

  • TSRA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.0 million.
  • TSRA has traded 62,756 shares today.
  • TSRA is trading at 4.32 times the normal volume for the stock at this time of day.
  • TSRA is trading at a new low 3.04% 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 TSRA:

Tessera Technologies, Inc., through its subsidiaries, develops, licenses, and delivers semiconductor packaging and interconnect solutions; and products and solutions in the United States, Europe, Korea, Taiwan, Japan, Other Asia, and internationally. The stock currently has a dividend yield of 2.5%. TSRA has a PE ratio of 17. Currently there are 2 analysts that rate Tessera Technologies a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Tessera Technologies has been 386,500 shares per day over the past 30 days. Tessera has a market cap of $1.6 billion and is part of the technology sector and electronics industry. The stock has a beta of 0.91 and a short float of 5.9% with 6.23 days to cover. Shares are up 10.7% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tessera Technologies as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • TSRA 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. Along with this, the company maintains a quick ratio of 20.84, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for TESSERA TECHNOLOGIES INC is rather high; currently it is at 54.29%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, TSRA's net profit margin of 30.16% significantly outperformed against the industry.
  • TESSERA TECHNOLOGIES INC's earnings per share declined by 45.5% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, TESSERA TECHNOLOGIES INC reported lower earnings of $2.22 versus $3.28 in the prior year. This year, the market expects an improvement in earnings ($2.31 versus $2.22).
  • TSRA, with its decline in revenue, underperformed when compared the industry average of 3.3%. Since the same quarter one year prior, revenues fell by 24.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of TESSERA TECHNOLOGIES INC has not done very well: it is down 17.17% 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, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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