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Today's Momo Momentum Stock To Watch: Cardinal Health (CAH)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Cardinal Health ( CAH) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Cardinal Health as such a stock due to the following factors:

  • CAH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $244.6 million.
  • CAH is currently in the upper 30% of its 1-year range.
  • CAH is in the upper 25% of its 20-day range.
  • CAH is in the upper 35% of its 5-day range.
  • CAH is currently trading above yesterday's high.
  • CAH has experienced a gap between today's open and yesterday's close of 0.2%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in CAH with the Ticky from Trade-Ideas. See the FREE profile for CAH NOW at Trade-Ideas

More details on CAH:

Cardinal Health, Inc., a healthcare services company, provides pharmaceutical and medical products and services in the United States and internationally. The company operates in two segments, Pharmaceutical and Medical. Currently there are 12 analysts that rate Cardinal Health a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Cardinal Health has been 3.2 million shares per day over the past 30 days. Cardinal Health has a market cap of $22.4 billion and is part of the services sector and wholesale industry. The stock has a beta of 0.58 and a short float of 2.1% with 1.68 days to cover.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cardinal Health as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, solid stock price performance, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Health Care Providers & Services industry average. The net income increased by 25.1% when compared to the same quarter one year prior, rising from $271.00 million to $339.00 million.
  • Powered by its strong earnings growth of 25.31% and other important driving factors, this stock has surged by 57.99% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • CARDINAL HEALTH INC has improved earnings per share by 25.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CARDINAL HEALTH INC reported lower earnings of $0.95 versus $3.07 in the prior year. This year, the market expects an improvement in earnings ($3.70 versus $0.95).
  • The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that CAH's debt-to-equity ratio is low, the quick ratio, which is currently 0.61, displays a potential problem in covering short-term cash needs.
  • Net operating cash flow has significantly increased by 67.42% to $951.00 million when compared to the same quarter last year. Despite an increase in cash flow of 67.42%, CARDINAL HEALTH INC is still growing at a significantly lower rate than the industry average of 321.79%.

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