3 Health Care Stocks Pushing The Sector Higher

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.

All three major indices traded up today with the Dow Jones Industrial Average ( ^DJI) trading up 67 points (0.4%) at 16,903 as of Friday, June 6, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 2,246 issues advancing vs. 764 declining with 128 unchanged.

The Health Care sector as a whole closed the day up 1.3% versus the S&P 500, which was up 0.3%. Top gainers within the Health Care sector included Merus Labs International ( MSLI), up 6.8%, Aoxing Pharmaceutical ( AXN), up 15.1%, VirtualScopics ( VSCP), up 2.6%, Bio-Rad Laboratories ( BIO.B), up 3.5% and XTL Biopharmaceuticals ( XTLB), up 12.1%.

TheStreet Ratings Group would like to highlight 3 stocks pushing the sector higher today:

VirtualScopics ( VSCP) is one of the companies that pushed the Health Care sector higher today. VirtualScopics was up $0.11 (2.6%) to $4.26 on light volume. Throughout the day, 480 shares of VirtualScopics exchanged hands as compared to its average daily volume of 4,400 shares. The stock ranged in a price between $4.26-$4.26 after having opened the day at $4.26 as compared to the previous trading day's close of $4.15.

VirtualScopics, Inc. provides imaging solutions for the pharmaceutical, biotechnology, and medical device industries. VirtualScopics has a market cap of $12.4 million and is part of the drugs industry. Shares are up 19.6% year-to-date as of the close of trading on Thursday. Currently there is 1 analyst who rates VirtualScopics a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates VirtualScopics as a sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on VSCP go as follows:

  • The gross profit margin for VIRTUALSCOPICS INC is currently lower than what is desirable, coming in at 32.24%. Regardless of VSCP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, VSCP's net profit margin of -27.44% significantly underperformed when compared to the industry average.
  • VSCP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 32.21%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Life Sciences Tools & Services industry and the overall market, VIRTUALSCOPICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • VSCP, with its decline in revenue, underperformed when compared the industry average of 19.2%. Since the same quarter one year prior, revenues slightly dropped by 7.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Life Sciences Tools & Services industry average. The net income increased by 42.0% when compared to the same quarter one year prior, rising from -$1.11 million to -$0.65 million.

You can view the full analysis from the report here: VirtualScopics 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.

At the close, Aoxing Pharmaceutical ( AXN) was up $0.04 (15.1%) to $0.32 on heavy volume. Throughout the day, 109,182 shares of Aoxing Pharmaceutical exchanged hands as compared to its average daily volume of 40,700 shares. The stock ranged in a price between $0.28-$0.36 after having opened the day at $0.30 as compared to the previous trading day's close of $0.28.

Aoxing Pharmaceutical Company, Inc., a specialty pharmaceutical company, researches, develops, manufactures, and distributes various narcotic, pain-management, and addiction treatment pharmaceutical products primarily in the People's Republic of China. Aoxing Pharmaceutical has a market cap of $14.5 million and is part of the drugs industry. Shares are up 16.6% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Aoxing Pharmaceutical a buy, no analysts rate it a sell, and none rate it a hold.

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

TheStreet Ratings rates Aoxing Pharmaceutical as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and disappointing return on equity.

Highlights from TheStreet Ratings analysis on AXN go as follows:

  • The debt-to-equity ratio is very high at 18.29 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.21, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, AOXING PHARMACEUTICAL CO INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • 45.40% is the gross profit margin for AOXING PHARMACEUTICAL CO INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, AXN's net profit margin of -52.66% significantly underperformed when compared to the industry average.
  • AOXING PHARMACEUTICAL CO INC has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, AOXING PHARMACEUTICAL CO INC reported poor results of -$0.34 versus -$0.32 in the prior year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Pharmaceuticals industry average. The net income increased by 39.0% when compared to the same quarter one year prior, rising from -$2.99 million to -$1.83 million.

You can view the full analysis from the report here: Aoxing Pharmaceutical 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.

Merus Labs International ( MSLI) was another company that pushed the Health Care sector higher today. Merus Labs International was up $0.10 (6.8%) to $1.58 on light volume. Throughout the day, 1,000 shares of Merus Labs International exchanged hands as compared to its average daily volume of 7,000 shares. The stock ranged in a price between $1.51-$1.58 after having opened the day at $1.51 as compared to the previous trading day's close of $1.48.

Merus Labs International Inc., a specialty pharmaceutical company, is engaged in the acquisition and licensing of branded prescription medicines in the United States, Canada, and Europe. Merus Labs International has a market cap of $78.9 million and is part of the drugs industry. Shares are up 3.6% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Merus Labs International a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Merus Labs International as a sell. The area that we feel has been the company's primary weakness has been its poor profit margins.

Highlights from TheStreet Ratings analysis on MSLI go as follows:

  • The gross profit margin for MERUS LABS INTERNATIONAL INC is currently very high, coming in at 81.88%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, MSLI's net profit margin of -21.74% significantly underperformed when compared to the industry average.
  • MERUS LABS INTERNATIONAL INC has improved earnings per share by 42.9% 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 year. During the past fiscal year, MERUS LABS INTERNATIONAL INC continued to lose money by earning -$0.06 versus -$0.70 in the prior year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Pharmaceuticals industry average. The net income increased by 36.7% when compared to the same quarter one year prior, rising from -$2.30 million to -$1.46 million.
  • This stock has increased by 147.61% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in MSLI do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • The revenue growth came in higher than the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 14.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.

You can view the full analysis from the report here: Merus Labs International 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.

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.

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