Strong On High Volume: Staar Surgical (STAA)

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

  • STAA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.2 million.
  • STAA has traded 61,751 shares today.
  • STAA is trading at 8.82 times the normal volume for the stock at this time of day.
  • STAA is trading at a new high 3.01% 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 STAA:

STAAR Surgical Company, together with its subsidiaries, designs, develops, manufactures, and sells implantable lenses for the eye, and delivery systems to deliver lenses into the eye. Currently there is 1 analyst that rates Staar Surgical a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Staar Surgical has been 212,800 shares per day over the past 30 days. Staar Surgical has a market cap of $369.3 million and is part of the health care sector and health services industry. The stock has a beta of 0.84 and a short float of 9.5% with 7.16 days to cover. Shares are down 44.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Staar Surgical as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • STAA's revenue growth has slightly outpaced the industry average of 3.7%. Since the same quarter one year prior, revenues rose by 10.4%. 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.
  • STAA's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, STAA has a quick ratio of 1.89, which demonstrates the ability of the company to cover short-term liquidity needs.
  • STAAR SURGICAL CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, STAAR SURGICAL CO turned its bottom line around by earning $0.01 versus -$0.04 in the prior year. This year, the market expects an improvement in earnings ($0.02 versus $0.01).
  • 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 743.5% when compared to the same quarter one year ago, falling from $0.28 million to -$1.79 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, STAAR SURGICAL CO's return on equity significantly trails that of both the industry average and the S&P 500.

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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