Trade-Ideas: Arena Pharmaceuticals (ARNA) Is Today's Strong On High Relative Volume Stock
Trade-Ideas LLC identified
(
) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Arena Pharmaceuticals as such a stock due to the following factors:
- ARNA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.9 million.
- ARNA has traded 714,087 shares today.
- ARNA is trading at 6.44 times the normal volume for the stock at this time of day.
- ARNA is trading at a new high 7.06% above yesterday's close.
'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.
EXCLUSIVE OFFER: Get the inside scoop on opportunities in ARNA with the Ticky from Trade-Ideas. See the FREE profile for ARNA NOW at Trade-Ideas
More details on ARNA:
Arena Pharmaceuticals, Inc., a biopharmaceutical company, discovers, develops, and commercializes novel drugs that target G protein-coupled receptors to address unmet medical needs in the United States and South Korea. Currently there are 2 analysts that rate Arena Pharmaceuticals a buy, 1 analyst rates it a sell, and 3 rate it a hold.
The average volume for Arena Pharmaceuticals has been 1.8 million shares per day over the past 30 days. Arena has a market cap of $403.5 million and is part of the health care sector and drugs industry. The stock has a beta of 1.40 and a short float of 6.3% with 6.03 days to cover. Shares are down 10.5% year-to-date as of the close of trading on Monday.
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.
Analysis:
rates Arena Pharmaceuticals as a
. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, generally disappointing historical performance in the stock itself and generally high debt management risk.
Highlights from the ratings report include:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, ARENA PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- ARNA's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 63.54%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Currently the debt-to-equity ratio of 1.80 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.89, which shows the ability to cover short-term cash needs.
- The revenue fell significantly faster than the industry average of 19.5%. Since the same quarter one year prior, revenues fell by 19.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- ARENA PHARMACEUTICALS INC has improved earnings per share by 10.0% 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, ARENA PHARMACEUTICALS INC reported poor results of -$0.45 versus -$0.29 in the prior year. This year, the market expects an improvement in earnings (-$0.34 versus -$0.45).
- You can view the full Arena Pharmaceuticals Ratings Report.
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.