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.

Trade-Ideas LLC identified

Ligand Pharmaceuticals

(

LGND

) 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 Ligand Pharmaceuticals as such a stock due to the following factors:

  • LGND has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.5 million.
  • LGND has traded 143,608 shares today.
  • LGND traded in a range 205.4% of the normal price range with a price range of $6.63.
  • LGND traded below its daily resistance level (quality: 14 days, meaning that the stock is crossing a resistance level set by the last 14 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 LGND:

Ligand Pharmaceuticals Incorporated operates as a biotechnology company in the United States. LGND has a PE ratio of 160.3. Currently there are 4 analysts that rate Ligand Pharmaceuticals a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Ligand Pharmaceuticals has been 394,500 shares per day over the past 30 days. Ligand has a market cap of $1.8 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.97 and a short float of 32.3% with 11.61 days to cover. Shares are up 68.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Ligand Pharmaceuticals as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, impressive record of earnings per share growth, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • LGND's very impressive revenue growth exceeded the industry average of 36.4%. Since the same quarter one year prior, revenues leaped by 56.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • LIGAND PHARMACEUTICAL INC 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, LIGAND PHARMACEUTICAL INC increased its bottom line by earning $0.57 versus $0.42 in the prior year. This year, the market expects an improvement in earnings ($2.16 versus $0.57).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Biotechnology industry. The net income increased by 277.5% when compared to the same quarter one year prior, rising from $1.87 million to $7.06 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, LIGAND PHARMACEUTICAL INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for LIGAND PHARMACEUTICAL INC is currently very high, coming in at 85.46%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 30.67% trails the industry average.

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