Today's Strong And Under The Radar Stock: Pharmerica (PMC)

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 Pharmerica ( PMC) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Pharmerica as such a stock due to the following factors:

  • PMC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.5 million.
  • PMC is making at least a new 3-day high.
  • PMC has a PE ratio of 89.
  • PMC is mentioned 1.42 times per day on StockTwits.
  • PMC has not yet been mentioned on StockTwits today.
  • PMC is currently in the upper 20% of its 1-year range.
  • PMC is in the upper 35% of its 20-day range.
  • PMC is in the upper 45% of its 5-day range.
  • PMC is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on PMC:

PharMerica Corporation operates as an institutional pharmacy services company in the United States. The company offers services to healthcare facilities; pharmacy management services to hospitals; specialty infusion services to patients outside hospitals; and oncology pharmacy services. PMC has a PE ratio of 89. Currently there are 4 analysts that rate Pharmerica a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Pharmerica has been 302,500 shares per day over the past 30 days. Pharmerica has a market cap of $1.0 billion and is part of the services sector and retail industry. The stock has a beta of 0.77 and a short float of 4% with 4.77 days to cover. Shares are up 60.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Pharmerica 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, good cash flow from operations, increase in net income 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:
  • PMC's revenue growth has slightly outpaced the industry average of 12.9%. Since the same quarter one year prior, revenues rose by 13.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.67, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.45, which illustrates the ability to avoid short-term cash problems.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 100.0% when compared to the same quarter one year prior, rising from $4.80 million to $9.60 million.
  • Net operating cash flow has significantly increased by 906.81% to $44.30 million when compared to the same quarter last year. In addition, PHARMERICA CORP has also vastly surpassed the industry average cash flow growth rate of 2.41%.
  • 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. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's 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 the other strengths this company displays justify these higher price levels.

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