Facts About In Play Stocks: Applied Optoelectronics Inc (NASDAQ: AAOI)

The trading week again will be shortened due to New Year’s Day on Monday. However, the market action should pick up substantially after that, with a number of notable economic updates set to hit the Street. Leading the way is the nonfarm payrolls report for December, which will come out on Friday. The Federal Open Market Committee’s (FOMC) December meeting minutes should attract plenty of attention, too. Quarterly updates from Walgreens Boots Alliance Inc (NASDAQ:WBA) and Constellation Brands, Inc. (NYSE:STZ) are about as big as it gets on the earnings front.

Below is a brief list of some key market events scheduled for the upcoming week. All earnings dates listed below are tentative and subject to change. Please check with each company’s respective website for official reporting dates.

On Monday, Jan. 1, the stock market will be closed for New Year’s Day.

Tuesday, Jan. 2, will bring Markit’s purchasing managers manufacturing index (PMI), but no earnings releases.

For Wednesday, Jan. 3, investors will digest the latest Fed meeting minutes, the Institute for Supply Management’s (ISM) manufacturing index, construction spending, and motor vehicle sales. For earnings, Rite Aid (RAD) and Commercial Metals (CMC) will report.

Weekly jobless claims come out on Thursday, Jan. 4, as does the ADP private-sector payrolls report, and the weekly update on domestic crude inventories. Monsanto (MON), Sonic (SONC), and Walgreens Boots Alliance (WBA) make up the earnings calendar.

The December nonfarm payrolls report highlights the action on Friday, Jan. 5. Investors will also digest international trade data, factory orders, and the ISM non-manufacturing index. Constellation Brands (STZ) rounds out the week’s earnings releases. (Source: Schaeffers Research)

Stock in Focus: Applied Optoelectronics, Inc. (NASDAQ: AAOI)

Applied Optoelectronics, Inc. (NASDAQ: AAOI) has grabbed attention from the analysts when it experienced a change of -1.80% in the current trading session to trade at $38.16. A total of 309,385 shares exchanged hands during the intra-day trade contrast with its average trading volume of 1.90M shares, while its relative volume stands at 0.64. Relative volume is the comparison of current volume to average volume for the same time of day, and it’s displayed as a ratio. If RVOL is less than 1 it is not In Play on this trading day and Investors may decide not to trade it.  If RVOL is above 2 it is In Play and this is more evidence Investors ought to be in the name.  When stocks are *very* In Play one can see a RVOL of 5 and above.  The higher the RVOL the more In Play the stock is.

Day traders strive to make money by exploiting minute price movements in individual assets (usually stocks, though currencies, futures, and options are traded as well), usually leveraging large amounts of capital to do so, therefore they trade on Stocks in Play. In Play Stocks are volatile enough to produce good risk and reward trading opportunities for both bull and bear traders intraday. Most company stocks have very little volatility. They generally move extremely slowly and they only produce big price swings when the company produces good or bad trading results, which may only happen a couple of times a year at best.

In deciding what to focus on – in a stock, say – a typical day trader looks for three things: liquidity, volatility and trading volume. Liquidity allows an investor to enter and exit a stock at a good price (i.e. tight spreads, or the difference between the bid and ask price of a stock, and low slippage, or the difference between the predictable price of a trade and the actual price). If a stock does not have good liquidity then it may take some time before a broker is able to negotiate a deal to buy or sell a stock and the broker may not be able to get the sell or buy price that the trader is looking for. This is a problem for day traders and it could mean the difference between a profitable and non-profitable trade.

Traders have different rules for what constitutes liquidity and a good guide is the volume of trades and volume of shares that are traded each day. 100,000 shares traded per day would be a minimum for most traders and some require 1,000,000.

Trading volume is a gauge of how many times a stock is bought and sold in a given time period (most commonly, within a day of trading, known as the average daily trading volume – ADTV). A high degree of volume indicates a lot of interest in a stock. Often, a boost in the volume of a stock is a harbinger of a price jump, either up or down.

Volatility is simply a measure of the predictable daily price range—the range in which a day trader operates. More volatility means greater profit or loss. After a recent check, Applied Optoelectronics, Inc. (NASDAQ: AAOI) stock is found to be 3.14% volatile for the week, while 4.32% volatility is recorded for the month.

Technical’s Snapshot:

The stock has a market cap of $763.60M and the number of outstanding shares has been calculated 19.65M. Based on a recent bid, its distance from 20 days simple moving average is -5.83%, and its distance from 50 days simple moving average is -7.67% while it has a distance of -33.74% from the 200 days simple moving average. The company’s distance from 52-week high price is -63.10% and the current price is 74.41% away from 52-week low price. The company has Relative Strength Index (RSI 14) of 40.56 together with Average True Range (ATR 14) of 1.65.

Stock’s Valuation:

Past 5 years growth of AAOI observed at 43.90%, and for the next five years the analysts that follow this company is expecting its growth at 18.00%. The stock’s price to sales ratio for trailing twelve months is 1.97 and price to book ratio for the most recent quarter is 2.31, whereas price to cash per share for the most recent quarter are 10.77. Its quick ratio for the most recent quarter is 2.00. Analysts mean recommendation for the stock is 2.30. This number is based on a 1 to 5 scale where 1 indicates a Strong Buy recommendation while 5 represents a Strong Sell.

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Jason P. Vasser gives us an insight into the most recent news hitting the Technology Sector in Wall Street. He has been an independent financial adviser for over 10 years in the city and in recent years turned his experience in finance and passion for journalism into a full time role. He performs analysis of Companies and publicizes valuable information for shareholder community.

Jason is an accomplished journalist who has a passion for travel. His desire to see the world has taken him to countries around the world and given him the opportunity to report for some of the top news organizations.