Rick Pendergraft's Avatar
Rick Pendergraft
published in Blogs
Aug 12, 2019
Microchip Technology beat EPS estimates and could be poised to rally

Microchip Technology beat EPS estimates and could be poised to rally

Chip manufacturer Microchip Technology (Nasdaq: MCHP) announced earnings results for its fiscal first quarter after the closing bell on August 6. The company posted earnings of $1.41 per share and the consensus estimate was $1.38 a share. The revenue came in at $1.32 billion and that was a little below the consensus of $1.33 billion.

Over the last three years the company has been able to grow earnings at a rate of 33% per year, but these results were down by 12% compared to last year. Revenue has increased by an average of 29% per year over the last three years and the first quarter results were up by 9% over the previous year.

Microchip’s management efficiency ratings are really strong with a return on equity of 38.2% and a profit margin of 31.5%.

From a valuation standpoint, the company is trading at a trailing P/E ratio of 62.3, but the forward P/E is only 12.25. The price to book ratio is at 3.82 and that is in line with the industry average.

Looking at the technical picture for Microchip we see several potential bullish factors for the stock. The Tickeron Technical Analysis Overview shows that the 10-day moving average is above the 50-day and has been since July 3. This has historically been a strong sign of a continued rally as long as the 10-day remains above the 50-day.

Also from the overview we see that “the lower Bollinger Band was broken -- a price increase is expected as the stock heads toward the middle band, which indicates a buy or call consideration for traders. In 34 of 47 cases where MCHP's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued Uptrend are 72%.”

Looking at the weekly chart we see that there is a trend line that connects the lows from last October and December, and the stock hit it again in May. Earlier this week the stock hit it again, but that was before the stock rallied post-earnings.

Another potential positive sign is that the 52-week moving average is right in the same area as the trend line and could provide a second layer of support.

The weekly overbought/oversold indicators aren’t anywhere near overbought territory at this time. The 10-week RSI is below the 50 level and the weekly stochastic readings are just above the midway point.

One particular area of analysis that really caught my attention on Microchip is the sentiment. The current short interest ratio is at 20.05 and that is the highest reading we have seen in the past year. There are 35.8 million shares sold short and the company averages 1.78 million shares of trading volume per day. The number of shares sold short has been higher at certain points in the past year, but this is the lowest average daily trading volume we have seen in the past 12 months.

Analysts’ ratings are what I would call average. There are a total of 23 analysts following the stock and 17 have it rated as a “buy” and six have it rated as a “hold”. The overall buy percentage is 73.9% and that is at the high end of the average range between 65 and 75%.

With the fundamentals being well above average and the stock clearly in an upward trend, I would look for Microchip to rally in the coming weeks. The short interest ratio being as high as it is could help propel the stock higher if short sellers have to start covering their positions.

Related Tickers: MCHP
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 07, 2021
4 Tricks Hedge Funds Use to Get Ahead

4 Tricks Hedge Funds Use to Get Ahead

If the stock market were Major League Baseball, hedge funds and institutional investors would be the pros on championship teams while everyday self-directed investors (SDIs) are the benchwarmers in the minors.It’s how they get ahead, and it’s why 90% of SDIs lose money trying to play (invest and trade) in the major leagues. The 4 tricks we discuss below are rooted in one common theme: they all use Artificial Intelligence and algorithms to generate data and ideas.
John Jacques's Avatar
John Jacques
published in Blogs
Mar 22, 2018
A.I. Stock Market Predictions: Head & Shoulders

A.I. Stock Market Predictions: Head & Shoulders

Statistics for the Head-and-Shoulders Bottom Pattern The days where only hedge funds used algorithms to trade stocks are officially over. Now retail investors can use Artificial Intelligence (A.I.  Here’s an example of the algorithm in action: Late last year, Tickeron’s A.I.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Jul 10, 2020
3 Stocks to Buy if Coronavirus Second Wave Hits

3 Stocks to Buy if Coronavirus Second Wave Hits

By analyzing market trends from the first wave, you can predict behavior for the second. Technology stocks have performed at historic levels this year, but the market is severely overbought.To compensate for that, look at performance during Q1 and Q2, the height of global Covid shutdowns.
Edward Flores's Avatar
Edward Flores
published in Blogs
Feb 06, 2021
How to Become the Millionaire Next Door

How to Become the Millionaire Next Door

The Golden Gate Bridge is always a fixture of these walks too, one of man's most beautiful creations.  As we were walking, at one point she turned to me and said, "Man, I'll never have a million dollars."" My girlfriend is 27 years old and works as a graphic designer, making about $75,000 a year.
Alla Petriaieva's Avatar
Alla Petriaieva
published in Blogs
Feb 23, 2021
Is Ethereum’s Bomb about to Explode?

Is Ethereum’s Bomb about to Explode?

Ethereum’s software is set for an update in October.Until it is finished, participants in the Ethereum blockchain must determine how to delay the difficulty bomb – code that necessitates a steadily increasing amount of computer power to mine blocks and unlock rewards – that is already in place.
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Aug 07, 2018
When Is the Next Recession Coming?

When Is the Next Recession Coming?

However, we also know that economists predicted 22 recessions out of 11 that took place since 1945. Are there real recession signs we should watch for?Indeed, the answer is yes, and here are a few very important ones: The first one is almost obvious and known to everyone – it is the Fed.
Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
May 22, 2020
Central banks have been buying $2.4 billion in assets every hour for the past two months

Central banks have been buying $2.4 billion in assets every hour for the past two months

Some $17.8 billion has been poured into  bond markets over the past week, the biggest move in more than three months.Around $3.5 billion has been invested into gold, the second largest on record. 
Rick Pendergraft's Avatar
Rick Pendergraft
published in Blogs
Feb 07, 2021
Mid-January Short Interest Report Shows 8 Stocks with Good Fundamentals and High Short Interest
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 10, 2021
How to Start Trading Penny Stocks

How to Start Trading Penny Stocks

Penny stocks have long been marginalized within the professional investment community, oftentimes being painted with a broad brush of simply being “too risky.” Leonardo DiCaprio’s depiction of the penny stock peddling conman, Jordan Belfort, in the Wolf of Wall Street certainly didn’t help.Here are four reasons to start trading them now. Reason #1: Let’s State the Obvious -- Penny Stocks are Cheap A single share of Apple Inc. costs over $350.
Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
May 08, 2020
US unemployment rate jumps to 14.7%, the highest in series history

US unemployment rate jumps to 14.7%, the highest in series history

The U.S. economy’s employment fell by -20.5 million in April. The coronavirus crisis led to unemployment rate soaring to 14.7% in the U.S, the highest rate in the Bureau of Labor Statistics-tracked series history that goes back to 1948. However, the figures were better compared to several economists'/analysts' forecasts of 22 million job losses and 16% unemployment rate.  Another unemployment measure that includes those who have stopped looking for work as well as those holding part-time jobs for economic reasons also touched an all-time high of 22.8%.