Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified

AbbVie

(

ABBV

) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified AbbVie as such a stock due to the following factors:

  • ABBV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $560.4 million.
  • ABBV has traded 6.0 million shares today.
  • ABBV traded in a range 205.2% of the normal price range with a price range of $2.24.
  • ABBV traded below its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on ABBV:

AbbVie Inc. discovers, develops, manufactures, and sells pharmaceutical products worldwide. The stock currently has a dividend yield of 2.9%. ABBV has a PE ratio of 62. Currently there are 9 analysts that rate AbbVie a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for AbbVie has been 10.9 million shares per day over the past 30 days. AbbVie has a market cap of $111.2 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.64 and a short float of 5.8% with 10.45 days to cover. Shares are up 7.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates AbbVie as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 1.9%. Since the same quarter one year prior, revenues rose by 10.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, ABBVIE INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for ABBVIE INC is currently very high, coming in at 84.68%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, ABBV's net profit margin of 20.27% significantly trails the industry average.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 26.94% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • The debt-to-equity ratio is very high at 11.09 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, ABBV's quick ratio is somewhat strong at 1.11, demonstrating the ability to handle short-term liquidity needs.

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