F5 Networks, Inc. and Other Technology Stocks Making Big Moves

By Investopedia Staff | August 07, 2012 AAA

The Nasdaq has risen 0.8%, the S&P 500 has increased 0.7% and the Dow has moved up 0.6% on a good day for the market so far. 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 0.7%, underperforming the market overall. The biggest movers in the sector are currently:

Company Market Cap Percentage Change
BroadSoft Inc (Nasdaq:BSFT) $766.7 million +32%
Mindray Medical International Ltd (ADR) (NYSE:MR) $3.61 billion +14.2%
Cepheid (Nasdaq:CPHD) $2.26 billion +11%
Plantronics, Inc. (NYSE:PLT) $1.42 billion +10.8%
Power Integrations, Inc. (Nasdaq:POWI) $1.06 billion -7.1%
F5 Networks, Inc. (Nasdaq:FFIV) $7.71 billion +5.9%
Anixter International Inc. (NYSE:AXE) $1.9 billion +5.8%

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After a big jump of 32%, BroadSoft (Nasdaq:BSFT) is trading at $36.83 per share. So far today, 4.5 million shares have changed hands, above yesterday's volume of 2.5 million shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investors can make use of valuation ratios to estimate whether a stock is fairly valued. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for BSFT is a high 7.16. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. All things being equal, a low P/S ratio is good news for investors, while a very high one can be a warning sign.

Mindray Medical International Ltd (NYSE:MR) rose a significant 14.2% to reach $35.79 per share. The company is currently trading a volume of 1.6 million shares. As a stock moves up or down, it is important to pay attention to the trading volume. This indicates the level of interest: the higher the volume, the more the interest. 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. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. The debt ratio for MR is a low 24.6%. A low debt ratio means the company has more available cash flow. 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.

Cepheid (Nasdaq:CPHD) is trading at $37.92 per share, a significant rise of 11%. So far today, the company's volume is one million shares, 1.1 times its average over the past three months. High volume indicates a lot of investor interest while low volume indicates the opposite. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. CPHD has a low debt-equity ratio of 1%. Companies with low D/E ratios are more attractive to investors because they are better able to protect their business interests in times of decline. 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.

Plantronics (NYSE:PLT) has soared 10.8% to reach a current price of $37.07 per share. The company's volume for the morning is 677,806 shares. This is 2.9 times its average daily volume. If a stock price moves on high volume, this means that the change is a significant one. Investors can use valuation ratios as tools to estimate what kind of deal a particular investment is. The capitalization ratio measures the debt component of the capital structure, or capitalization of a company (i.e., the sum of long-term debt liabilities and shareholder equity) to support operations and growth. PLT has a low capitalization ratio of 6.6%. Investors generally consider a company with low debt and high equity levels is a good quality investment. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.

Power Integrations (Nasdaq:POWI) is currently trading at a share price of $34.65, a 7.1% decline. The company's volume is currently 440,996 shares for the day,. 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. POWI's P/E ratio of 35.2 falls below the industry average of 268.56. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: How To Find P/E And PEG Ratios

Increasing 5.9%, F5 Networks (Nasdaq:FFIV) is trading at $102.86 per share. This morning, the company is trading a volume of one million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. 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/earnings to growth (PEG) ratio divides a company's P/E ratio by its growth rate of earnings-per-share. FFIV's PEG ratio of 1.4 is in line with the industry average. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Anixter International (NYSE:AXE) is up 5.8% to reach a current price of $60.44 per share. The company's volume for the day so far is 203,695 shares, 0.4 times the current three-month average. The trading volume for a stock indicates the level of investor interest. 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, often expressed simply as "price-to-book", provides investors a way to compare the market value, or what they are paying for each share, to a conservative measure of the value of the firm. AXE's stock is trading for more than its book value with a P/B ratio of 1.85. 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. 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: Investment Valuation Ratios: Price/Book Value Ratio

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. It is important to weigh current activity against historical performance when making any investment decisions. Keep in mind that all these ratios should be compared against historical numbers and industry information in order to get a more complete picture.

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