Valeant Pharmaceuticals International (VRX) 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
Valeant Pharmaceuticals International
(
) 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 Valeant Pharmaceuticals International as such a stock due to the following factors:
- VRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $832.8 million.
- VRX has traded 3.7 million shares today.
- VRX traded in a range 269.6% of the normal price range with a price range of $18.19.
- VRX traded below its daily resistance level (quality: 18 days, meaning that the stock is crossing a resistance level set by the last 18 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 VRX:
Valeant Pharmaceuticals International, Inc. develops, manufactures, and markets pharmaceuticals, over-the-counter products, and medical devices worldwide. VRX has a PE ratio of 76.7. Currently there are 11 analysts that rate Valeant Pharmaceuticals International a buy, no analysts rate it a sell, and 2 rate it a hold.
The average volume for Valeant Pharmaceuticals International has been 2.9 million shares per day over the past 30 days. Valeant Pharmaceuticals International has a market cap of $68.8 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.80 and a short float of 1.8% with 1.13 days to cover. Shares are up 40.8% year-to-date as of the close of trading on Tuesday.
Analysis:
rates Valeant Pharmaceuticals International as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and solid stock price performance. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
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 rose by 10.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- VALEANT PHARMACEUTICALS INTL reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, VALEANT PHARMACEUTICALS INTL turned its bottom line around by earning $2.67 versus -$2.62 in the prior year. This year, the market expects an improvement in earnings ($10.41 versus $2.67).
- 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 332.2% when compared to the same quarter one year prior, rising from $123.77 million to $534.90 million.
- The gross profit margin for VALEANT PHARMACEUTICALS INTL is rather high; currently it is at 55.21%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, VRX's net profit margin of 23.46% significantly outperformed against the industry.
- Powered by its strong earnings growth of 333.33% and other important driving factors, this stock has surged by 40.52% 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.
- You can view the full Valeant Pharmaceuticals International Ratings Report.
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