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Tickers in this Article: SSYS, ALR, ITRI, ATE, KYAK, FIRE, CVLT
It's been a good morning for the market. The Nasdaq has moved up 0.6%; the S&P 500 is up 0.4%; and the Dow has risen 0.3%. The technology sector is a category of stocks relating to the research, development and/or distribution of technologically based goods and services. This sector contains businesses revolving around the manufacturing of electronics, creation of software, computers or products and services relating to information technology. The technology sector offers a wide arrange of products and services for both customers and other businesses. Consumer goods like personal computers, stereos and televisions are continually improved and upgraded, offering the latest technology to all users. Businesses receive information and services from software and database systems, which allow the companies to make strategic business decisions.

The Technology sector (XLK) is up 0.6%, underperforming the market overall. The biggest movers in the sector are currently:
CompanyMarket CapPercentage Change
Stratasys (Nasdaq:SSYS)$1.21 billion+7.8%
Alere (NYSE:ALR)$1.57 billion+7%
Itron (Nasdaq:ITRI)$1.65 billion+5.5%
Advantest Corp (NYSE:ATE)$2.15 billion-5.1%
Kayak (Nasdaq:KYAK)$1.38 billion-3.9%
Sourcefire (Nasdaq:FIRE)$1.44 billion-3.6%
CommVault Systems (Nasdaq:CVLT)$2.55 billion+3.5%
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Stratasys (Nasdaq:SSYS) is up 7.8% to reach a current price of $60.96 per share. So far today, 430,122 shares have changed hands. 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. A company's investment value can be 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/book value ratio is one of the more common methods of determining whether a stock is fairly valued. SSYS' stock is trading for more than its book value with a P/B ratio of 6.71. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. To put things in perspective, should be made among companies in the same industry rather than across industries. SEE: How Buybacks Warps The Price-To-Book Ratio

Rising 7%, Alere (NYSE:ALR) is currently trading at $20.75 per share. The company's volume is currently 1.4 million shares for the day, 2.4 times its current daily 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. 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. In a nutshell, the price/sales ratio shows how much Wall Street values every dollar of the company's sales. ALR's P/S ratio of 0.6 is fairly low. Highly levered companies are likely to have lower P/S ratios because the price aspect of this ratio only measures stock market valuation while sales is a function of both stock market and bond market capitalization. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.

Itron (Nasdaq:ITRI) has risen 5.5% to hit a current price of $44.12 per share. So far today, 185,849 shares of the company's stock have changed hands. If a stock price makes a big move up or down, volume lets us know the significance of that move. While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. The debt ratio shows the proportion of assets that a company is financing through debt. The debt ratio for ITRI is 55.2%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

At $11.77, Advantest Corp (NYSE:ATE) has slipped 5.1%. So far today, the company's volume is 7,206 shares, 2.8 times the current three-month average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Valuation ratios allow the investor to make a quick determination as to a company's investment value. To a large degree, the debt-equity (D/E) ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. ATE's debt-equity ratio of 20% is on the low end. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

After a decline of 3.9%, Kayak (Nasdaq:KYAK) has hit a share price of $34.42. The company's volume for the day so far is 61,641 shares. Volume is used to evaluate how meaningful the price movement of a stock is. 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. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. KYAK's P/B ratio of 229.47 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. Users need to be careful when applying this ratio though, as it is more useful for industrial companies that have a lot of tangible assets than it is for technology or consumer product companies that may not have much in the way of hard assets. SEE: Using The Price-To-Book Ratio To Evaluate Companies

Falling 3.6%, Sourcefire (Nasdaq:FIRE) is currently at a share price of $46.25. The company's volume is currently 1.2 million shares for the day, 2.1 times the current daily average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. FIRE's P/S ratio of 7.87 is on the high side. This could be a good sign if the share price increases. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

After an increase of 3.5%, CommVault Systems (Nasdaq:CVLT) has reached a current price of $58.61. The company's volume is currently 286,931 shares. This is on pace to fall short of yesterday's volume of 782,810 shares. In technical analysis, trading volume is used to determine the strength of a market indicator. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. CVLT has a debt ratio of 43%, 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. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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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