Merge Healthcare (MRGE) Is Today's Strong 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 Merge Healthcare ( MRGE) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Merge Healthcare as such a stock due to the following factors:

  • MRGE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $2.8 million.
  • MRGE has traded 393,559 shares today.
  • MRGE is trading at 2.48 times the normal volume for the stock at this time of day.
  • MRGE is trading at a new high 9.03% 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 MRGE:

Merge Healthcare Incorporated develops software solutions that facilitate the sharing of images to create an electronic healthcare experience for patients and physicians worldwide. It operates in two segments, Merge Healthcare and Merge DNA. MRGE has a PE ratio of 41. Currently there is 1 analyst that rates Merge Healthcare a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Merge Healthcare has been 729,300 shares per day over the past 30 days. Merge Healthcare has a market cap of $449.9 million and is part of the technology sector and computer software & services industry. The stock has a beta of 2.76 and a short float of 4.1% with 4.08 days to cover. Shares are up 28.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Merge Healthcare as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:
  • This stock has managed to rise its share value by 92.10% over the past twelve months. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • MERGE HEALTHCARE INC has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MERGE HEALTHCARE INC turned its bottom line around by earning $0.00 versus -$0.41 in the prior year. This year, the market expects an increase in earnings to $0.22 from $0.00.
  • 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 Health Care Technology industry and the overall market on the basis of return on equity, MERGE HEALTHCARE INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has significantly decreased to $0.75 million or 92.37% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Currently the debt-to-equity ratio of 1.87 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, MRGE maintains a poor quick ratio of 0.76, which illustrates the inability to avoid short-term cash problems.

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