Trade-Ideas: Perrigo (PRGO) Is Today's Momo Momentum Stock
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
(
) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Perrigo as such a stock due to the following factors:
- PRGO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $167.5 million.
- PRGO has a PE ratio of 58.0.
- PRGO is currently in the upper 30% of its 1-year range.
- PRGO is in the upper 25% of its 20-day range.
- PRGO is in the upper 35% of its 5-day range.
- PRGO is currently trading above yesterday's high.
- PRGO has experienced a gap between today's open and yesterday's close of 0.5%.
'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 PRGO:
Perrigo Company plc, through its subsidiaries, develops, manufactures, and distributes over-the-counter (OTC) and generic prescription (Rx) pharmaceuticals, nutritional products, and active pharmaceutical ingredients (API). The stock currently has a dividend yield of 0.3%. PRGO has a PE ratio of 58.0. Currently there are 13 analysts that rate Perrigo a buy, no analysts rate it a sell, and 1 rates it a hold.
The average volume for Perrigo has been 985,400 shares per day over the past 30 days. Perrigo has a market cap of $22.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.65 and a short float of 1.6% with 1.74 days to cover. Shares are down 3.5% year-to-date as of the close of trading on Wednesday.
Analysis:
rates Perrigo as a
. 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 expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 10.4%. Since the same quarter one year prior, revenues slightly increased by 9.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.43, which clearly demonstrates the ability to cover short-term cash needs.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 181.5% when compared to the same quarter one year prior, rising from -$86.10 million to $70.20 million.
- Net operating cash flow has significantly increased by 124.17% to $272.60 million when compared to the same quarter last year. In addition, PERRIGO CO PLC has also vastly surpassed the industry average cash flow growth rate of -11.57%.
- 47.67% is the gross profit margin for PERRIGO CO PLC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.55% trails the industry average.
- You can view the full Perrigo Ratings Report.
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