Today's Weak On High Volume Stock: Sangamo BioSciences (SGMO)

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

  • SGMO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $6.7 million.
  • SGMO has traded 250,487 shares today.
  • SGMO is trading at 10.51 times the normal volume for the stock at this time of day.
  • SGMO is trading at a new low 10.10% 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 SGMO:

Sangamo BioSciences, Inc., a clinical stage biopharmaceutical company, focuses on the research, development, and commercialization of engineered DNA-binding proteins as novel therapeutic products for unmet medical needs in the United States. Currently there are 6 analysts that rate Sangamo BioSciences a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Sangamo BioSciences has been 782,900 shares per day over the past 30 days. Sangamo BioSciences has a market cap of $896.9 million and is part of the health care sector and drugs industry. The stock has a beta of 2.58 and a short float of 13.3% with 13.69 days to cover. Shares are down 15.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sangamo BioSciences as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in stock price during the past year and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.

Highlights from the ratings report include:
  • SGMO's very impressive revenue growth greatly exceeded the industry average of 18.8%. Since the same quarter one year prior, revenues leaped by 66.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • SANGAMO BIOSCIENCES INC has improved earnings per share by 33.3% 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SANGAMO BIOSCIENCES INC continued to lose money by earning -$0.39 versus -$0.47 in the prior year. For the next year, the market is expecting a contraction of 43.6% in earnings (-$0.56 versus -$0.39).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Biotechnology industry average, but is greater than that of the S&P 500. The net income increased by 29.8% when compared to the same quarter one year prior, rising from -$7.57 million to -$5.32 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Biotechnology industry and the overall market, SANGAMO BIOSCIENCES INC's return on equity significantly trails that of both the industry average and the S&P 500.

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