Neostem (NBS): Today's Weak On High Volume 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 Neostem ( NBS) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Neostem as such a stock due to the following factors:

  • NBS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.4 million.
  • NBS has traded 397,753 shares today.
  • NBS is trading at 16.81 times the normal volume for the stock at this time of day.
  • NBS is trading at a new low 3.45% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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 NBS:

NeoStem, Inc., a biotechnology company, develops cell based therapeutics. Currently there are 4 analysts that rate Neostem a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Neostem has been 223,700 shares per day over the past 30 days. Neostem has a market cap of $242.3 million and is part of the health care sector and drugs industry. The stock has a beta of 0.22 and a short float of 10.1% with 2.66 days to cover. Shares are down 29.9% 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 Neostem as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • 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 Biotechnology industry. The net income has significantly decreased by 87.1% when compared to the same quarter one year ago, falling from -$9.07 million to -$16.97 million.
  • The gross profit margin for NEOSTEM INC is rather low; currently it is at 16.91%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -412.29% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$13.49 million or 103.94% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, NBS has underperformed the S&P 500 Index, declining 13.21% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • 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, NEOSTEM 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.

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