Today's Water-Logged And Getting Wetter Stock: Alkermes (ALKS)

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 Alkermes ( ALKS) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Alkermes as such a stock due to the following factors:

  • ALKS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $41.0 million.
  • ALKS has traded 305,504 shares today.
  • ALKS traded in a range 209.1% of the normal price range with a price range of $3.42.
  • ALKS traded below its daily resistance level (quality: 15 days, meaning that the stock is crossing a resistance level set by the last 15 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on ALKS:

Alkermes Public Limited Company, an integrated biopharmaceutical company, develops medicines that enhance patient outcomes. ALKS has a PE ratio of 384.4. Currently there are 4 analysts that rate Alkermes a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Alkermes has been 964,300 shares per day over the past 30 days. Alkermes has a market cap of $7.7 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.49 and a short float of 4% with 3.94 days to cover. Shares are up 29.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Alkermes as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Highlights from the ratings report include:
  • ALKERMES PLC reported significant earnings per share improvement 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ALKERMES PLC turned its bottom line around by earning $0.18 versus -$0.96 in the prior year. This year, the market expects an improvement in earnings ($1.11 versus $0.18).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Biotechnology industry. The net income increased by 53.5% when compared to the same quarter one year prior, rising from -$16.71 million to -$7.76 million.
  • Despite currently having a low debt-to-equity ratio of 0.36, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 6.24 is very high and demonstrates very strong liquidity.
  • Powered by its strong earnings growth of 53.84% and other important driving factors, this stock has surged by 145.64% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • Net operating cash flow has decreased to $41.37 million or 16.84% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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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