Trade-Ideas LLC identified

Novartis

(

NVS

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Novartis as such a stock due to the following factors:

  • NVS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $186.2 million.
  • NVS has traded 401,117 shares today.
  • NVS is trading at 3.60 times the normal volume for the stock at this time of day.
  • NVS is trading at a new low 4.02% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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.

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More details on NVS:

Novartis AG researches, develops, manufactures, and markets a range of healthcare products worldwide. The stock currently has a dividend yield of 2.8%. NVS has a PE ratio of 22. Currently there are 5 analysts that rate Novartis a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Novartis has been 2.0 million shares per day over the past 30 days. Novartis has a market cap of $195.6 billion and is part of the health care sector and drugs industry. Shares are down 4% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Novartis as a

buy

. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • NVS's debt-to-equity ratio is very low at 0.30 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that NVS's debt-to-equity ratio is low, the quick ratio, which is currently 0.52, displays a potential problem in covering short-term cash needs.
  • NOVARTIS AG's earnings per share declined by 40.8% 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, NOVARTIS AG increased its bottom line by earning $4.32 versus $3.72 in the prior year. This year, the market expects an improvement in earnings ($5.00 versus $4.32).
  • NVS, with its decline in revenue, slightly underperformed the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 6.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for NOVARTIS AG is rather high; currently it is at 64.51%. Regardless of NVS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NVS's net profit margin of 15.39% is significantly lower than the industry average.

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