Thermo Fisher Scientific (TMO) Is Today's Momo Momentum 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 Thermo Fisher Scientific ( TMO) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Thermo Fisher Scientific as such a stock due to the following factors:

  • TMO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $222.5 million
  • TMO has a PE ratio of 30
  • TMO is currently in the upper 30% of its 1-year range
  • TMO is in the upper 25% of its 20-day range
  • TMO is in the upper 35% of its 5-day range
  • TMO is currently trading above yesterday's high
  • TMO has experienced a gap between today's open and yesterday's close of 1%

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on TMO:

Thermo Fisher Scientific Inc. provides analytical instruments, equipment, reagents and consumables, software, and services for research, manufacturing, analysis, discovery, and diagnostics worldwide. The stock currently has a dividend yield of 0.5%. TMO has a PE ratio of 30. Currently there are 13 analysts that rate Thermo Fisher Scientific a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Thermo Fisher Scientific has been 1.5 million shares per day over the past 30 days. Thermo Fisher Scientific has a market cap of $51.85 billion and is part of the health care sector and health services industry. The stock has a beta of 0.84 and a short float of 0.6% with 1.54 days to cover. Shares are up 5% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Thermo Fisher Scientific as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • TMO's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 0.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for THERMO FISHER SCIENTIFIC INC is rather high; currently it is at 51.49%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.82% trails the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.75, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.50 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

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