China Cord Blood (CO): 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 China Cord Blood ( CO) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified China Cord Blood as such a stock due to the following factors:

  • CO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.2 million
  • CO has traded 117,543 shares today
  • CO is trading at 2.07 times the normal volume for the stock at this time of day
  • CO is trading at a new low 3.030303952128300171153796327416785061359405517578125 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 CO:

China Cord Blood Corporation, together with its subsidiaries, primarily provides umbilical cord blood storage and ancillary services in the People's Republic of China. CO has a PE ratio of 29. Currently there are two analysts that rate China Cord Blood a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for China Cord Blood has been 387,000 shares per day over the past 30 days. China Cord Blood has a market cap of $462.8 million and is part of the health care sector and health services industry. The stock has a beta of 1.7 and a short float of 0.3% with 0.04 days to cover. Shares are up 38.7% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates China Cord Blood as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • CO's revenue growth has slightly outpaced the industry average of 12.9%. Since the same quarter one year prior, revenues rose by 16.6%. 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 current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 6.10, which clearly demonstrates the ability to cover short-term cash needs.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite 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.
  • The gross profit margin for CHINA CORD BLOOD CORP is currently very high, coming in at 78.87%. Regardless of CO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CO's net profit margin of 10.40% compares favorably to the industry average.
  • CHINA CORD BLOOD CORP's earnings per share declined by 42.9% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, CHINA CORD BLOOD CORP reported lower earnings of $0.22 versus $0.26 in the prior year. For the next year, the market is expecting a contraction of 4.5% in earnings ($0.21 versus $0.22).

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