Oculus Innovative (OCLS): 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.

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

  • OCLS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $7.2 million.
  • OCLS has traded 686,888 shares today.
  • OCLS is trading at 4.87 times the normal volume for the stock at this time of day.
  • OCLS is trading at a new low 7.01% 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 OCLS:

Oculus Innovative Sciences, Inc. OCLS has a PE ratio of 6.

The average volume for Oculus Innovative has been 719,300 shares per day over the past 30 days. Oculus Innovative has a market cap of $26.2 million and is part of the health care sector and drugs industry. The stock has a beta of 2.89 and a short float of 3.1% with 0.06 days to cover. Shares are up 14.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Oculus Innovative as a sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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 Pharmaceuticals industry. The net income has significantly decreased by 867.9% when compared to the same quarter one year ago, falling from -$0.61 million to -$5.91 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 55.46%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 666.66% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Net operating cash flow has decreased to -$1.06 million or 11.40% when compared to the same quarter last year. Despite a decrease in cash flow of 11.40%, OCULUS INNOVATIVE SCIENCES is in line with the industry average cash flow growth rate of -20.80%.
  • OCULUS INNOVATIVE SCIENCES has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, OCULUS INNOVATIVE SCIENCES turned its bottom line around by earning $0.43 versus -$1.26 in the prior year. For the next year, the market is expecting a contraction of 381.4% in earnings (-$1.21 versus $0.43).
  • 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. When compared to other companies in the Pharmaceuticals industry and the overall market, OCULUS INNOVATIVE SCIENCES's return on equity is below that of both the industry average and the S&P 500.

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