Aoxing Pharmaceutical (AXN) Weak On High Volume

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

  • AXN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.3 million.
  • AXN has traded 918,199 shares today.
  • AXN is trading at 15.52 times the normal volume for the stock at this time of day.
  • AXN is trading at a new low 18.35% 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 AXN:

Aoxing Pharmaceutical Company, Inc., a specialty pharmaceutical company, researches, develops, manufactures, and distributes various narcotic, pain-management, and addiction treatment pharmaceutical products primarily in the People's Republic of China.

The average volume for Aoxing Pharmaceutical has been 659,600 shares per day over the past 30 days. Aoxing has a market cap of $194.1 million and is part of the health care sector and drugs industry. The stock has a beta of 6.14 and a short float of 1% with 0.10 days to cover. Shares are up 775.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Aoxing Pharmaceutical as a sell. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures.

Highlights from the ratings report include:
  • The debt-to-equity ratio is very high at 6.71 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.19, which clearly demonstrates the inability to cover short-term cash needs.
  • 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 Pharmaceuticals industry and the overall market, AOXING PHARMACEUTICAL CO INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for AOXING PHARMACEUTICAL CO INC is currently very high, coming in at 76.69%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, AXN's net profit margin of 8.81% significantly trails the industry average.
  • Net operating cash flow has significantly increased by 1057.02% to $5.66 million when compared to the same quarter last year. In addition, AOXING PHARMACEUTICAL CO INC has also vastly surpassed the industry average cash flow growth rate of -20.80%.
  • This stock has increased by 496.55% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in AXN do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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