Jazz Pharmaceuticals (JAZZ) Is Today's Momo Momentum 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 Jazz Pharmaceuticals ( JAZZ) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Jazz Pharmaceuticals as such a stock due to the following factors:

  • JAZZ has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $180.8 million.
  • JAZZ has a PE ratio of 102.8.
  • JAZZ is currently in the upper 30% of its 1-year range.
  • JAZZ is in the upper 25% of its 20-day range.
  • JAZZ is in the upper 35% of its 5-day range.
  • JAZZ is currently trading above yesterday's high.
  • JAZZ has experienced a gap between today's open and yesterday's close of 0.9%.

'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.

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More details on JAZZ:

Jazz Pharmaceuticals Public Limited Company, a specialty biopharmaceutical company, identifies, develops, and commercializes pharmaceutical products for various medical needs in the United States, Europe, and internationally. JAZZ has a PE ratio of 102.8. Currently there are 9 analysts that rate Jazz Pharmaceuticals a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Jazz Pharmaceuticals has been 850,300 shares per day over the past 30 days. Jazz has a market cap of $8.0 billion and is part of the health care sector and drugs industry. The stock has a beta of 0.38 and a short float of 2.9% with 1.57 days to cover. Shares are up 14% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Jazz Pharmaceuticals as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 4.6%. Since the same quarter one year prior, revenues rose by 39.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 3.5% when compared to the same quarter one year prior, going from $42.19 million to $43.66 million.
  • Net operating cash flow has significantly increased by 759.31% to $74.92 million when compared to the same quarter last year. In addition, JAZZ PHARMACEUTICALS PLC has also vastly surpassed the industry average cash flow growth rate of -4.12%.
  • The gross profit margin for JAZZ PHARMACEUTICALS PLC is currently very high, coming in at 90.94%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 14.99% trails the industry average.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 65.50% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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