Catamaran (CTRX) Is Today's Storm The Castle 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 Catamaran ( CTRX) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Catamaran as such a stock due to the following factors:

  • CTRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $61.1 million.
  • CTRX has traded 206,688 shares today.
  • CTRX is trading at 1.68 times the normal volume for the stock at this time of day.
  • CTRX crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. 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 on. 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 CTRX:

Catamaran Corporation provides pharmacy benefit management (PBM) services and healthcare information technology (HCIT) solutions to the healthcare benefits management industry in North America. The company operates in two segments: PBM and HCIT. CTRX has a PE ratio of 43.1. Currently there are 12 analysts that rate Catamaran a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Catamaran has been 1.5 million shares per day over the past 30 days. Catamaran has a market cap of $10.0 billion and is part of the health care sector and health services industry. The stock has a beta of -0.07 and a short float of 3.3% with 4.08 days to cover. Shares are up 2.6% year-to-date as of the close of trading on Tuesday.

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 Catamaran as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • CTRX's revenue growth has slightly outpaced the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 13.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CTRX's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.24, which illustrates the ability to avoid short-term cash problems.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 256.2% when compared to the same quarter one year prior, rising from $20.48 million to $72.94 million.
  • Net operating cash flow has significantly increased by 61.75% to $99.60 million when compared to the same quarter last year. In addition, CATAMARAN CORP has also vastly surpassed the industry average cash flow growth rate of -30.81%.
  • CATAMARAN CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, CATAMARAN CORP's EPS of $0.73 remained unchanged from the prior years' EPS of $0.73. This year, the market expects an improvement in earnings ($1.98 versus $0.73).

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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