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Tickers in this Article: FSLR, CRUS, MSCC, CAVM, VECO, CREE, ASML
The market is on the rise this morning. The Nasdaq has moved up 1.1%; the S&P 500 has moved up 0.6%; and the Dow is trading up 0.4%.

Underperforming the market overall, the Semiconductors sector (XLK) is up 0.7%, and these are its current biggest movers:
CompanyMarket CapPercentage Change
First Solar (Nasdaq:FSLR).97 billion+7.2%
Cirrus Logic (Nasdaq:CRUS).7 billion+7.2%
Microsemi (Nasdaq:MSCC).83 billion+5.3%
Cavium (Nasdaq:CAVM).72 billion+5.1%
Veeco Instruments (Nasdaq:VECO).43 billion+4.2%
Cree (Nasdaq:CREE).25 billion+4.1%
ASML Holding N.V (Nasdaq:ASML).92 billion+2.5%
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First Solar (Nasdaq:FSLR) has risen 7.2% and is currently trading at $24.23 per share. So far today, the company's volume is 4.8 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Investment valuation ratios can be very useful in determining the value of a stock, but it is very important to keep in mind that while some financial ratios have general rules (or a broad application), in most instances it is a prudent practice to look at a company's historical performance and use peer company/industry comparisons to put any given company's ratio in perspective. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. FSLR has a low debt-equity ratio of 15%. This shows that the company's assets are financed primarily through equity. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.

After an increase of 7.2%, Cirrus Logic (Nasdaq:CRUS) has reached a current price of $44.80. The company's volume is currently 2.3 million shares for the day, 0.9 times its average over the past three months. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. Using price/earnings ratios (P/E ratios) does not give an indication of whether or not an individual company's ratio is reasonable, a shortcoming that can be corrected by using the price/earnings to growth ratio (PEG ratio). PEG ratio for CRUS is consistent with the industry average at 1.95. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Rising 5.3%, Microsemi (Nasdaq:MSCC) is currently trading at $21.72 per share. So far today, the company's volume is 466,288 shares. This is more trading activity than there was yesterday. Volume indicates the level of interest that investors have in a company at its current price. Valuation ratios include the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. MSCC's stock is trading for more than its book value with a P/B ratio of 2.18. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: Investment Valuation Ratios: Price/Book Value Ratio

Cavium (Nasdaq:CAVM) is currently trading at $36.29 per share, a 5.1% increase. So far today, the company's volume is 267,188 shares, 0.3 times the current daily average. Volume is an important indicator because it indicates how significant a price shift is. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. CAVM has a debt ratio of 20.6%, which is fairly low. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Veeco Instruments (Nasdaq:VECO) has risen 4.2% to hit a current price of $38.12 per share. The company is currently trading a volume of 280,684 shares. High volume indicates a lot of investor interest while low volume indicates the opposite. A company's value as an investment is more easily estimated using valuation ratios such as the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. The price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. The P/S ratio for VECO is a high 1.83. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. It is important to keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.

Increasing 4.1%, Cree (Nasdaq:CREE) is trading at $29.15 per share. So far today, the company's volume is 948,983 shares, 0.8 times its current three-month average. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made a strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. When used consistently and uniformly, the price/earnings to growth (PEG) ratio is an essential tool that adds dimension to the price/earnings ratio, allows comparisons across diverse industries and is always on the lookout for value. CREE's PEG ratio is 3.56. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.

ASML Holding N.V (Nasdaq:ASML) has increased to a share price of $57.56, a 2.5% rise. The company's volume is currently 1.1 million shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. ASML has a P/B ratio of 4.68 which shows that its share price is higher than its book value. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. SEE: How Buybacks Warps The Price-To-Book Ratio

The Bottom Line The nature of the market is such that stocks will have good days and bad days. It is important to weigh current activity against historical performance when making any investment decisions. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.

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