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

Zogenix

(

ZGNX

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

  • ZGNX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $26.1 million.
  • ZGNX has traded 194,318 shares today.
  • ZGNX is trading at 7.20 times the normal volume for the stock at this time of day.
  • ZGNX is trading at a new high 4.03% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 ZGNX:

Zogenix, Inc., a pharmaceutical company, develops and commercializes therapies for the treatment of central nervous system disorders in the United States. Its marketed product includes Zohydro ER, an extended-release formulation of hydrocodone for the treatment of severe chronic pain. ZGNX has a PE ratio of 2. Currently there are 5 analysts that rate Zogenix a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Zogenix has been 2.2 million shares per day over the past 30 days. Zogenix has a market cap of $250.0 million and is part of the health care sector and drugs industry. The stock has a beta of 1.48 and a short float of 2.3% with 2.39 days to cover. Shares are up 21.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Zogenix as a

hold

. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • 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, ZOGENIX INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is somewhat low, currently at 0.71, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that ZGNX's debt-to-equity ratio is low, the quick ratio, which is currently 0.70, displays a potential problem in covering short-term cash needs.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Pharmaceuticals industry average, but is greater than that of the S&P 500. The net income has decreased by 9.2% when compared to the same quarter one year ago, dropping from -$20.93 million to -$22.86 million.
  • The gross profit margin for ZOGENIX INC is rather low; currently it is at 21.93%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -495.47% is significantly below that of the industry average.

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