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

  • MLNX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.6 million.
  • MLNX has traded 534,336 shares today.
  • MLNX is trading at 27.71 times the normal volume for the stock at this time of day.
  • MLNX is trading at a new low 9.02% 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 MLNX:

Mellanox Technologies, Ltd., a fabless semiconductor company, designs, manufactures, and sells interconnect products and solutions. MLNX has a PE ratio of 33. Currently there are 9 analysts that rate Mellanox Technologies a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Mellanox Technologies has been 567,400 shares per day over the past 30 days. Mellanox has a market cap of $2.4 billion and is part of the technology sector and electronics industry. The stock has a beta of 0.69 and a short float of 6.5% with 4.27 days to cover. Shares are up 21.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Mellanox Technologies 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 reasonable valuation levels. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.9%. Since the same quarter one year prior, revenues rose by 34.2%. 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.
  • The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, MLNX has a quick ratio of 1.88, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, MELLANOX TECHNOLOGIES LTD's return on equity is below that of both the industry average and the S&P 500.
  • 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 168.3% when compared to the same quarter one year ago, falling from $10.50 million to -$7.17 million.

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