Strong On High Relative Volume: POZEN (POZN)

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 POZEN ( POZN) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified POZEN as such a stock due to the following factors:

  • POZN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.7 million.
  • POZN has traded 134,011 shares today.
  • POZN is trading at 7.61 times the normal volume for the stock at this time of day.
  • POZN is trading at a new high 4.08% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 POZN:

POZEN Inc., a pharmaceutical company, develops products for the treatment of acute and chronic pain, and pain related conditions in the United States and internationally. POZN has a PE ratio of 18. Currently there are 2 analysts that rate POZEN a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for POZEN has been 337,300 shares per day over the past 30 days. POZEN has a market cap of $304.9 million and is part of the health care sector and drugs industry. The stock has a beta of 2.26 and a short float of 10.5% with 2.34 days to cover. Shares are up 17.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates POZEN as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • POZN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 31.31, which clearly demonstrates the ability 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, POZEN INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • POZEN INC 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, POZEN INC turned its bottom line around by earning $0.59 versus -$0.55 in the prior year. This year, the market expects an improvement in earnings ($0.67 versus $0.59).
  • 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 100.9% when compared to the same quarter one year ago, falling from $2.91 million to -$0.03 million.
  • The gross profit margin for POZEN INC is currently extremely low, coming in at 3.72%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -0.61% is significantly below that of the industry average.

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