Trade-Ideas: Actavis (ACT) Is Today's Strong On High Relative Volume Stock

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 or Stephanie Link.

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

  • ACT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $168.2 million.
  • ACT has traded 729,613 shares today.
  • ACT is trading at 4.59 times the normal volume for the stock at this time of day.
  • ACT is trading at a new high 3.00% 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 ACT:

Actavis, Inc., an integrated specialty pharmaceutical company, engages in developing, manufacturing, marketing, selling, and distributing generic, branded generic, brand, biosimilar, and over-the-counter pharmaceutical products worldwide. Currently there are 12 analysts that rate Actavis a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Actavis has been 1.7 million shares per day over the past 30 days. Actavis has a market cap of $16.2 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.11 and a short float of 3.9% with 4.46 days to cover. Shares are up 49.8% year to date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Actavis as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.5%. Since the same quarter one year prior, revenues rose by 24.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, ACT's share price has jumped by 60.53%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • Net operating cash flow has significantly increased by 117.72% to $218.60 million when compared to the same quarter last year. In addition, ACTAVIS INC has also vastly surpassed the industry average cash flow growth rate of -48.63%.
  • The gross profit margin for ACTAVIS INC is rather high; currently it is at 50.24%. 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 -5.42% is in-line with the industry average.
  • ACTAVIS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ACTAVIS INC reported lower earnings of $0.75 versus $2.07 in the prior year. This year, the market expects an improvement in earnings ($8.30 versus $0.75).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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