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 Merck ( MRK) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Merck as such a stock due to the following factors:
- MRK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $649.6 million.
- MRK has a PE ratio of 31.4.
- MRK is currently in the upper 30% of its 1-year range.
- MRK is in the upper 25% of its 20-day range.
- MRK is in the upper 35% of its 5-day range.
- MRK is currently trading above yesterday's high.
- MRK has experienced a gap between today's open and yesterday's close of 0.1%.
'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills. EXCLUSIVE OFFER: Get the inside scoop on opportunities in MRK with the Ticky from Trade-Ideas. See the FREE profile for MRK NOW at Trade-Ideas More details on MRK: Merck & Co., Inc. provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products worldwide. The stock currently has a dividend yield of 3.7%. MRK has a PE ratio of 31.4. Currently there are 5 analysts that rate Merck a buy, 1 analyst rates it a sell, and 8 rate it a hold. The average volume for Merck has been 13.9 million shares per day over the past 30 days. The stock has a beta of 0.52 and a short float of 1.1% with 2.40 days to cover. Shares are up 14.3% year to date as of the close of trading on Monday. 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 Merck as a buy. Among the primary strengths of the company is its expanding profit margins over time. 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 gross profit margin for MERCK & CO is rather high; currently it is at 63.32%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.18% trails the industry average.
- MERCK & CO's earnings per share declined by 32.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, MERCK & CO reported lower earnings of $2.00 versus $2.03 in the prior year. This year, the market expects an improvement in earnings ($3.50 versus $2.00).
- MRK, with its decline in revenue, slightly underperformed the industry average of 2.6%. Since the same quarter one year prior, revenues slightly dropped by 4.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- In its most recent trading session, MRK has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- 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 Pharmaceuticals industry. The net income has significantly decreased by 35.0% when compared to the same quarter one year ago, falling from $1,730.00 million to $1,124.00 million.
- You can view the full Merck Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.