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 NPS Pharmaceuticals ( NPSP) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified NPS Pharmaceuticals as such a stock due to the following factors:

  • NPSP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.4 million.
  • NPSP has traded 1.0 million shares today.
  • NPSP traded in a range 219.9% of the normal price range with a price range of $3.28.
  • NPSP traded above its daily resistance level (quality: 60 days, meaning that the stock is crossing a resistance level set by the last 60 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in NPSP with the Ticky from Trade-Ideas. See the FREE profile for NPSP NOW at Trade-Ideas

More details on NPSP:

NPS Pharmaceuticals, Inc., a biopharmaceutical company, engages in the development of therapeutic products in the United States. Its lead product is Gattex for the treatment of adult patients with short bowel syndrome (SBS) who are dependent on parenteral support. NPSP has a PE ratio of 687.2. Currently there are 7 analysts that rate NPS Pharmaceuticals a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for NPS Pharmaceuticals has been 2.2 million shares per day over the past 30 days. NPS has a market cap of $2.9 billion and is part of the health care sector and drugs industry. The stock has a beta of -0.01 and a short float of 9.9% with 6.59 days to cover. Shares are down 11.4% year-to-date as of the close of trading on Monday.

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 NPS Pharmaceuticals as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:
  • NPSP's very impressive revenue growth exceeded the industry average of 42.1%. Since the same quarter one year prior, revenues leaped by 53.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NPS PHARMACEUTICALS INC reported significant earnings per share improvement 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NPS PHARMACEUTICALS INC continued to lose money by earning -$0.16 versus -$0.22 in the prior year. This year, the market expects an improvement in earnings ($0.05 versus -$0.16).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • NPSP's debt-to-equity ratio of 0.91 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 4.94 is very high and demonstrates very strong liquidity.
  • 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 Biotechnology industry and the overall market, NPS PHARMACEUTICALS INC'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.

null