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Catamaran (CTRX) Shows Signs Of Being Water-Logged And Getting Wetter

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 Catamaran (CTRX) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Catamaran as such a stock due to the following factors:

  • CTRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $65.2 million.
  • CTRX has traded 2.6 million shares today.
  • CTRX traded in a range 216.7% of the normal price range with a price range of $2.43.
  • CTRX traded below its daily resistance level (quality: 70 days, meaning that the stock is crossing a resistance level set by the last 70 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on CTRX:

Catamaran Corporation provides pharmacy benefit management (PBM) services and healthcare information technology (HCIT) solutions to the healthcare benefits management industry in North America. The company operates in two segments: PBM and HCIT. CTRX has a PE ratio of 46.3. Currently there are 12 analysts that rate Catamaran a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Catamaran has been 1.4 million shares per day over the past 30 days. Catamaran has a market cap of $10.8 billion and is part of the health care sector and health services industry. The stock has a beta of -0.07 and a short float of 3% with 3.23 days to cover. Shares are up 10.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Catamaran as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • CTRX's revenue growth has slightly outpaced the industry average of 11.1%. Since the same quarter one year prior, revenues rose by 13.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CTRX's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.24, which illustrates the ability to avoid short-term cash problems.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 256.2% when compared to the same quarter one year prior, rising from $20.48 million to $72.94 million.
  • Net operating cash flow has significantly increased by 61.75% to $99.60 million when compared to the same quarter last year. In addition, CATAMARAN CORP has also vastly surpassed the industry average cash flow growth rate of -32.79%.
  • CATAMARAN CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, CATAMARAN CORP's EPS of $0.73 remained unchanged from the prior years' EPS of $0.73. This year, the market expects an improvement in earnings ($1.98 versus $0.73).

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