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

XenoPort

(

XNPT

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

  • XNPT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.1 million.
  • XNPT has traded 88,501 shares today.
  • XNPT is trading at 5.30 times the normal volume for the stock at this time of day.
  • XNPT is trading at a new low 7.25% 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 XNPT:

XenoPort, Inc., a biopharmaceutical company, focuses on developing and commercializing a portfolio of product candidates for the treatment of neurological and other disorders. Currently there is 1 analyst that rates XenoPort a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for XenoPort has been 485,800 shares per day over the past 30 days. XenoPort has a market cap of $477.7 million and is part of the health care sector and drugs industry. The stock has a beta of 1.84 and a short float of 8.5% with 6.70 days to cover. Shares are down 12% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates XenoPort as a

sell

. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and weak operating cash flow.

Highlights from the ratings report include:

  • Currently the debt-to-equity ratio of 1.54 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 12.02, which shows the ability to cover short-term cash needs.
  • Net operating cash flow has significantly decreased to -$20.41 million or 63.01% when compared to the same quarter last year. Despite a decrease in cash flow of 63.01%, XENOPORT INC is in line with the industry average cash flow growth rate of -70.80%.
  • 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, XENOPORT INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • XENOPORT INC has improved earnings per share by 8.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, XENOPORT INC continued to lose money by earning -$0.82 versus -$1.80 in the prior year. For the next year, the market is expecting a contraction of 58.5% in earnings (-$1.30 versus -$0.82).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Pharmaceuticals industry average. The net income increased by 0.7% when compared to the same quarter one year prior, going from -$20.55 million to -$20.41 million.

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