Trade-Ideas LLC identified

Novo Nordisk A/S

(

NVO

) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Novo Nordisk A/S as such a stock due to the following factors:

  • NVO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $111.5 million.
  • NVO has traded 959,814 shares today.
  • NVO is trading at 9.45 times the normal volume for the stock at this time of day.
  • NVO crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on NVO:

TheStreet Recommends

Novo Nordisk A/S, a healthcare company, engages in the discovery, development, manufacture, and marketing of pharmaceutical products worldwide. It operates in two segments, Diabetes Care and Biopharmaceuticals. The stock currently has a dividend yield of 0.9%. Currently there are 2 analysts that rate Novo Nordisk A/S a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Novo Nordisk A/S has been 1.6 million shares per day over the past 30 days. Novo Nordisk A/S has a market cap of $148.5 billion and is part of the health care sector and drugs industry. Shares are up 34.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Novo Nordisk A/S as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, notable return on equity, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 6.2%. Since the same quarter one year prior, revenues slightly increased by 6.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Pharmaceuticals industry and the overall market, NOVO NORDISK A/S's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for NOVO NORDISK A/S is currently very high, coming in at 85.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 31.12% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $1,813.81 million or 21.87% when compared to the same quarter last year. In addition, NOVO NORDISK A/S has also vastly surpassed the industry average cash flow growth rate of -45.83%.

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