Trade-Ideas LLC identified

Anacor Pharmaceuticals

(

ANAC

) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Anacor Pharmaceuticals as such a stock due to the following factors:

  • ANAC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $59.2 million.
  • ANAC has traded 1.1 million shares today.
  • ANAC traded in a range 231.1% of the normal price range with a price range of $9.25.
  • ANAC traded above its daily resistance level (quality: 9 days, meaning that the stock is crossing a resistance level set by the last 9 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on ANAC:

Anacor Pharmaceuticals, Inc., a biopharmaceutical company, focuses on discovering, developing, and commercializing novel small-molecule therapeutics derived from its boron chemistry platform. It markets KERYDIN (tavaborole) topical solution for the treatment of onychomycosis of the toenails. Currently there are 3 analysts that rate Anacor Pharmaceuticals a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Anacor Pharmaceuticals has been 1.1 million shares per day over the past 30 days. Anacor has a market cap of $2.6 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.37 and a short float of 15.2% with 6.40 days to cover. Shares are down 48% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Anacor Pharmaceuticals as a

sell

. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity and generally high debt management risk.

Highlights from the ratings report include:

  • 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 Biotechnology industry. The net income has significantly decreased by 86.8% when compared to the same quarter one year ago, falling from -$10.12 million to -$18.91 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, ANACOR PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio of 1.17 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 5.44, which shows the ability to cover short-term cash needs.
  • Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • ANACOR PHARMACEUTICALS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, ANACOR PHARMACEUTICALS INC continued to lose money by earning -$1.40 versus -$2.07 in the prior year. This year, the market expects an improvement in earnings (-$1.25 versus -$1.40).

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