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 WuXi PharmaTech ( WX) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified WuXi PharmaTech as such a stock due to the following factors:

  • WX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $41.7 million.
  • WX has traded 319,377 shares today.
  • WX is trading at 9.64 times the normal volume for the stock at this time of day.
  • WX is trading at a new low 6.05% 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 WX:

WuXi PharmaTech (Cayman) Inc. operates as a pharmaceutical, biotechnology, and medical device research and development outsourcing company in China and the United States. It operates in two segments, Laboratory Services and Manufacturing Services. WX has a PE ratio of 19.7. Currently there are 4 analysts that rate WuXi PharmaTech a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for WuXi PharmaTech has been 537,700 shares per day over the past 30 days. WuXi PharmaTech has a market cap of $2.6 billion and is part of the health care sector and health services industry. Shares are up 9.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates WuXi PharmaTech as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • WX's revenue growth has slightly outpaced the industry average of 16.5%. Since the same quarter one year prior, revenues rose by 21.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • WX's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, WX has a quick ratio of 1.61, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 36.92% is the gross profit margin for WUXI PHARMATECH (CAYMAN)-ADR which we consider to be strong. Regardless of WX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WX's net profit margin of 17.30% compares favorably to the industry average.
  • WUXI PHARMATECH (CAYMAN)-ADR's earnings per share improvement from the most recent quarter was slightly positive. 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, WUXI PHARMATECH (CAYMAN)-ADR reported lower earnings of $1.56 versus $1.58 in the prior year. This year, the market expects an improvement in earnings ($1.85 versus $1.56).

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