3 Stocks Driving The Drugs Industry 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 are trading down today with the Dow Jones Industrial Average ( ^DJI) trading down 134.49 points (-0.8%) at 16,435 as of Tuesday, Aug. 5, 2014, 3:55 PM ET. The NYSE advances/declines ratio sits at 814 issues advancing vs. 2,221 declining with 117 unchanged.

The Drugs industry as a whole closed the day down 0.3% versus the S&P 500, which was down 0.9%. Top gainers within the Drugs industry included Aoxing Pharmaceutical ( AXN), up 9.4%, China Pharma ( CPHI), up 4.7%, NephroGenex ( NRX), up 3.8%, Vermillion ( VRML), up 3.3% and Prima Biomed ( PBMD), up 5.6%.

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

Vermillion ( VRML) is one of the companies that pushed the Drugs industry higher today. Vermillion was up $0.07 (3.3%) to $2.21 on average volume. Throughout the day, 41,554 shares of Vermillion exchanged hands as compared to its average daily volume of 39,900 shares. The stock ranged in a price between $2.03-$2.25 after having opened the day at $2.11 as compared to the previous trading day's close of $2.14.

Vermillion, Inc., together with its subsidiaries, is engaged in the discovery, development, and commercialization of diagnostic tests that help physicians diagnose, treat, and enhance outcomes for patients. It develops diagnostic tests in the fields of oncology and women's health. Vermillion has a market cap of $76.0 million and is part of the health care sector. Shares are down 9.3% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Vermillion a buy, no analysts rate it a sell, and none rate it a hold.

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TheStreet Ratings rates Vermillion as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from TheStreet Ratings analysis on VRML go as follows:

  • 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 Health Care Equipment & Supplies industry. The net income has significantly decreased by 55.1% when compared to the same quarter one year ago, falling from -$2.57 million to -$3.99 million.
  • Net operating cash flow has significantly decreased to -$3.51 million or 61.29% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • VRML has underperformed the S&P 500 Index, declining 22.65% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, VERMILLION INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for VERMILLION INC is currently very high, coming in at 90.82%. Regardless of VRML's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VRML's net profit margin of -1307.21% significantly underperformed when compared to the industry average.

You can view the full analysis from the report here: Vermillion 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, China Pharma ( CPHI) was up $0.01 (4.7%) to $0.32 on light volume. Throughout the day, 42,953 shares of China Pharma exchanged hands as compared to its average daily volume of 87,000 shares. The stock ranged in a price between $0.30-$0.32 after having opened the day at $0.30 as compared to the previous trading day's close of $0.30.

China Pharma Holdings, Inc. develops, manufactures, and markets generic and branded pharmaceutical, and biochemical products to hospitals and private retailers in the People's Republic of China. China Pharma has a market cap of $13.9 million and is part of the health care sector. Shares are down 7.2% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate China Pharma 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 China Pharma as a sell. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity.

Highlights from TheStreet Ratings analysis on CPHI go as follows:

  • 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, CHINA PHARMA HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • CHINA PHARMA HOLDINGS INC has improved earnings per share by 16.7% 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, CHINA PHARMA HOLDINGS INC swung to a loss, reporting -$0.45 versus $0.10 in the prior year.
  • CPHI, with its decline in revenue, slightly underperformed the industry average of 5.4%. Since the same quarter one year prior, revenues fell by 14.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 41.65% is the gross profit margin for CHINA PHARMA HOLDINGS INC which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -33.63% is in-line with the industry average.
  • Net operating cash flow has significantly increased by 124.81% to $2.49 million when compared to the same quarter last year. In addition, CHINA PHARMA HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of -66.20%.

You can view the full analysis from the report here: China Pharma 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.

Aoxing Pharmaceutical ( AXN) was another company that pushed the Drugs industry higher today. Aoxing Pharmaceutical was up $0.04 (9.4%) to $0.43 on average volume. Throughout the day, 30,834 shares of Aoxing Pharmaceutical exchanged hands as compared to its average daily volume of 25,700 shares. The stock ranged in a price between $0.40-$0.44 after having opened the day at $0.44 as compared to the previous trading day's close of $0.39.

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 $20.2 million and is part of the health care sector. Shares are up 62.3% year-to-date as of the close of trading on Monday. Currently there are no analysts who rate Aoxing Pharmaceutical a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates Aoxing Pharmaceutical as a sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Highlights from TheStreet Ratings analysis on AXN go as follows:

  • Net operating cash flow has decreased to -$4.35 million or 41.91% when compared to the same quarter last year. Despite a decrease in cash flow AOXING PHARMACEUTICAL CO INC is still fairing well by exceeding its industry average cash flow growth rate of -66.20%.
  • AOXING PHARMACEUTICAL CO INC has improved earnings per share by 20.0% 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.
  • 43.50% 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 -74.48% significantly underperformed when compared to the industry average.
  • Investors have driven up the company's shares by 53.32% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the future course of this stock, we feel that the risks involved in investing in AXN do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 29.8% when compared to the same quarter one year prior, rising from -$2.60 million to -$1.82 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.

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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