3 Rallying Tech Stocks With Negative Inventory Trends

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Includes: ANEN, ASMIY, CRUS
by: Kapitall

Do you consider a company's sales trends when evaluating stocks? Because many companies earn a majority of their profits through revenue, a sales analysis is an important part of almost any company's story.

To illustrate this, we ran a screen. We began by screening the tech sector for stocks with strong upward momentum, trading above their 20-day, 50-day, and 200-day moving averages.

We then compared growth in revenue to growth in inventory over the last year. We screened for stocks with negative sales trends, with faster growth in inventory than revenue over the last year. Since inventory represents the portion of goods not yet sold, slower growth in revenue than inventory is considered a negative sign.

To screen for declining liquidity, we also only focused on those companies with inventory increasing as a percent of current assets.

Do you think these companies are in hot water? Use this list as a starting point for your own analysis.

List sorted by change in revenue over the last year.

1. ASM International NV (ASMI): Engages in researching, developing, manufacturing, marketing, and servicing equipment and materials used to produce semiconductor devices. Market cap at $1.96B, most recent closing price at $36.06. The stock is currently trading 8.58% above its 20-day moving average, 4.66% above its 50-day MA, and 23.76% above its 200-day MA. Revenue grew by -28.04% during the most recent quarter ($311.02M vs. $432.19M y/y). Inventory grew by -0.4% during the same time period ($377.64M vs. $379.15M y/y). Inventory, as a percentage of current assets, increased from 30.09% to 32.25% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

2. Anaren Inc. (NASDAQ:ANEN): Designs, develops, manufactures, and sells microwave components and subsystems for the wireless communications, satellite communications, and defense electronics markets. Market cap at $274.8M, most recent closing price at $18.53. The stock is currently trading 3.53% above its 20-day moving average, 5.58% above its 50-day MA, and 2.02% above its 200-day MA. Revenue grew by -21.13% during the most recent quarter ($34.72M vs. $44.02M y/y). Inventory grew by 5.16% during the same time period ($38.13M vs. $36.26M y/y). Inventory, as a percentage of current assets, increased from 26.86% to 32.82% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

3. Cirrus Logic Inc. (NASDAQ:CRUS): Develops high-precision analog and mixed-signal integrated circuits. Market cap at $1.6B, most recent closing price at $24.95. The stock is currently trading 2.05% above its 20-day moving average, 6.83% above its 50-day MA, and 37.37% above its 200-day MA. Revenue grew by 21% during the most recent quarter ($110.63M vs. $91.43M y/y). Inventory grew by 38.05% during the same time period ($55.91M vs. $40.5M y/y). Inventory, as a percentage of current assets, increased from 12.68% to 15.9% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-26).

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.