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Today's Momo Momentum Stock To Watch: Celgene (CELG)

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

  • CELG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $484.5 million.
  • CELG has a PE ratio of 55.3.
  • CELG is currently in the upper 30% of its 1-year range.
  • CELG is in the upper 25% of its 20-day range.
  • CELG is in the upper 35% of its 5-day range.
  • CELG is currently trading above yesterday's high.
  • CELG has experienced a gap between today's open and yesterday's close of 1.2%.

'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.

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More details on CELG:

Celgene Corporation, a biopharmaceutical company, discovers, develops, and commercializes therapies to treat cancer and immune-inflammatory related diseases in the United States and internationally. CELG has a PE ratio of 55.3. Currently there are 19 analysts that rate Celgene a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Celgene has been 6.1 million shares per day over the past 30 days. Celgene has a market cap of $69.5 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.11 and a short float of 1.6% with 2.56 days to cover. Shares are up 1.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Celgene as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, robust revenue growth, notable return on equity, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, CELG's share price has jumped by 46.65%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 25.6%. Since the same quarter one year prior, revenues rose by 18.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Biotechnology industry and the overall market, CELGENE CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 51.67% to $557.10 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 14.84%.
  • The gross profit margin for CELGENE CORP is currently very high, coming in at 96.58%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CELG's net profit margin of 16.16% significantly trails the industry average.

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