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.

Trade-Ideas LLC identified Novo Nordisk A/S ( NVO) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Novo Nordisk A/S as such a stock due to the following factors:

  • NVO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $163.0 million.
  • NVO is currently in the upper 30% of its 1-year range.
  • NVO is in the upper 25% of its 20-day range.
  • NVO is in the upper 35% of its 5-day range.
  • NVO is currently trading above yesterday's high.
  • NVO has experienced a gap between today's open and yesterday's close of 1.8%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on NVO:

Novo Nordisk A/S, a healthcare company, engages in the discovery, development, manufacture, and marketing of pharmaceutical products worldwide. It operates in two segments, Diabetes Care and Biopharmaceuticals. The stock currently has a dividend yield of 1%. Currently there are 2 analysts that rate Novo Nordisk A/S a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Novo Nordisk A/S has been 1.6 million shares per day over the past 30 days. Novo Nordisk A/S has a market cap of $144.9 billion and is part of the health care sector and drugs industry. Shares are up 26.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Novo Nordisk A/S as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Pharmaceuticals industry and the overall market, NOVO NORDISK A/S's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for NOVO NORDISK A/S is currently very high, coming in at 83.76%. Regardless of NVO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NVO's net profit margin of 25.97% significantly outperformed against the industry.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • NVO's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
  • NVO, with its decline in revenue, slightly underperformed the industry average of 8.2%. Since the same quarter one year prior, revenues fell by 16.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.

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