Water-Logged And Getting Wetter: Insys Therapeutics (INSY)

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 Insys Therapeutics ( INSY) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Insys Therapeutics as such a stock due to the following factors:

  • INSY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.3 million.
  • INSY has traded 1.4 million shares today.
  • INSY traded in a range 221.1% of the normal price range with a price range of $3.65.
  • INSY traded below its daily resistance level (quality: 9 days, meaning that the stock is crossing a resistance level set by the last 9 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on INSY:

Insys Therapeutics, Inc., a specialty pharmaceutical company, develops and commercializes supportive care products. INSY has a PE ratio of 79. Currently there are 3 analysts that rate Insys Therapeutics a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Insys Therapeutics has been 948,300 shares per day over the past 30 days. Insys has a market cap of $2.9 billion and is part of the health care sector and drugs industry. The stock has a beta of -1.58 and a short float of 64.4% with 14.09 days to cover. Shares are up 94.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Insys Therapeutics as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • INSY's very impressive revenue growth greatly exceeded the industry average of 22.2%. Since the same quarter one year prior, revenues leaped by 70.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • INSY 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. To add to this, INSY has a quick ratio of 2.31, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for INSYS THERAPEUTICS INC is currently very high, coming in at 92.65%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, INSY's net profit margin of 11.33% significantly trails the industry average.
  • Net operating cash flow has significantly increased by 139.41% to $16.19 million when compared to the same quarter last year. Despite an increase in cash flow, INSYS THERAPEUTICS INC's cash flow growth rate is still lower than the industry average growth rate of 156.02%.
  • Compared to its closing price of one year ago, INSY's share price has jumped by 178.72%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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