Strong On High Volume: AcelRx Pharmaceuticals (ACRX)

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 AcelRx Pharmaceuticals ( ACRX) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified AcelRx Pharmaceuticals as such a stock due to the following factors:

  • ACRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.0 million.
  • ACRX has traded 204,308 shares today.
  • ACRX is trading at 3.81 times the normal volume for the stock at this time of day.
  • ACRX is trading at a new high 3.14% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on ACRX:

AcelRx Pharmaceuticals, Inc., a development stage specialty pharmaceutical company, focuses on the development and commercialization of therapies for the treatment of acute and breakthrough pain (BTP). Currently there are 4 analysts that rate AcelRx Pharmaceuticals a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for AcelRx Pharmaceuticals has been 1.1 million shares per day over the past 30 days. AcelRx has a market cap of $291.5 million and is part of the health care sector and health services industry. The stock has a beta of 1.80 and a short float of 33.4% with 10.31 days to cover. Shares are down 52.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

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

Highlights from the ratings report include:
  • Net operating cash flow has declined marginally to -$9.81 million or 4.10% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ACELRX PHARMACEUTICALS INC has marginally lower results.
  • ACRX'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 36.91%, 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.
  • 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 Pharmaceuticals industry and the overall market, ACELRX PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • ACELRX PHARMACEUTICALS INC has improved earnings per share by 36.2% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ACELRX PHARMACEUTICALS INC continued to lose money by earning -$0.68 versus -$1.50 in the prior year. For the next year, the market is expecting a contraction of 61.8% in earnings (-$1.10 versus -$0.68).
  • ACRX, with its very weak revenue results, has greatly underperformed against the industry average of 4.7%. Since the same quarter one year prior, revenues plummeted by 82.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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