Today's Strong And Under The Radar Stock: AmerisourceBergen (ABC)

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 AmerisourceBergen ( ABC) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified AmerisourceBergen as such a stock due to the following factors:

  • ABC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $102.8 million.
  • ABC is making at least a new 3-day high.
  • ABC has a PE ratio of 67.4.
  • ABC is mentioned 0.45 times per day on StockTwits.
  • ABC has not yet been mentioned on StockTwits today.
  • ABC is currently in the upper 20% of its 1-year range.
  • ABC is in the upper 35% of its 20-day range.
  • ABC is in the upper 45% of its 5-day range.
  • ABC is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on ABC:

AmerisourceBergen Corporation sources and distributes pharmaceutical products to healthcare providers, pharmaceutical and biotech manufacturers, and specialty drug patients in the United States and internationally. The stock currently has a dividend yield of 1.2%. ABC has a PE ratio of 67.4. Currently there are 8 analysts that rate AmerisourceBergen a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for AmerisourceBergen has been 1.3 million shares per day over the past 30 days. AmerisourceBergen has a market cap of $17.2 billion and is part of the services sector and wholesale industry. The stock has a beta of 0.77 and a short float of 3% with 4.71 days to cover. Shares are up 9.7% 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 AmerisourceBergen as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 20.4%. Since the same quarter one year prior, revenues rose by 38.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 589.36% to $519.84 million when compared to the same quarter last year. In addition, AMERISOURCEBERGEN CORP has also vastly surpassed the industry average cash flow growth rate of 11.14%.
  • Compared to its closing price of one year ago, ABC's share price has jumped by 27.52%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • 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 Providers & Services industry. The net income has significantly decreased by 107.6% when compared to the same quarter one year ago, falling from $168.44 million to -$12.78 million.
  • The debt-to-equity ratio of 1.00 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.45, which clearly demonstrates the inability to cover short-term cash needs.

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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