Trade-Ideas LLC identified

Taro Pharmaceutical Industries

(

TARO

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

  • TARO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $39.5 million.
  • TARO has traded 110,573 shares today.
  • TARO is trading at 2.95 times the normal volume for the stock at this time of day.
  • TARO is trading at a new low 3.06% 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 TARO:

Taro Pharmaceutical Industries Ltd., a science-based pharmaceutical company, engages in the development, manufacture, and marketing of pharmaceutical products in the United States, Canada, Israel, and internationally. TARO has a PE ratio of 12.

The average volume for Taro Pharmaceutical Industries has been 178,700 shares per day over the past 30 days. Taro has a market cap of $6.4 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.59 and a short float of 2.7% with 3.96 days to cover. Shares are down 3.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Taro Pharmaceutical Industries as a

buy

. 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, attractive valuation levels, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • TARO's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 8.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • TARO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.98, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for TARO PHARMACEUTICL INDS LTD is currently very high, coming in at 85.96%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 43.36% significantly outperformed against the industry average.
  • After a year of stock price fluctuations, the net result is that TARO's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. 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.

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