Trade-Ideas LLC identified

Mead Johnson Nutrition

(

MJN

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

  • MJN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $88.7 million.
  • MJN has traded 256,642 shares today.
  • MJN is trading at 3.96 times the normal volume for the stock at this time of day.
  • MJN 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 MJN:

Mead Johnson Nutrition Company manufactures, distributes, and sells infant formulas, children's nutrition, and other nutritional products. The stock currently has a dividend yield of 1.8%. MJN has a PE ratio of 35. Currently there are 4 analysts that rate Mead Johnson Nutrition a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for Mead Johnson Nutrition has been 1.3 million shares per day over the past 30 days. Mead Johnson Nutrition has a market cap of $17.4 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 1.42 and a short float of 6.4% with 8.87 days to cover. Shares are up 16% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Mead Johnson Nutrition as a

hold

. The company's strengths can be seen in multiple areas, such as its expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • The gross profit margin for MEAD JOHNSON NUTRITION CO is rather high; currently it is at 66.46%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.55% trails the industry average.
  • After a year of stock price fluctuations, the net result is that MJN'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. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • MJN, with its decline in revenue, underperformed when compared the industry average of 16.5%. Since the same quarter one year prior, revenues fell by 12.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food Products industry. The net income has significantly decreased by 64.9% when compared to the same quarter one year ago, falling from $207.40 million to $72.70 million.
  • Net operating cash flow has decreased to $160.10 million or 41.67% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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