Cara Therapeutics (CARA) Flagged As Strong On High Volume

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 Cara Therapeutics ( CARA) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Cara Therapeutics as such a stock due to the following factors:

  • CARA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.5 million.
  • CARA has traded 67,471 shares today.
  • CARA is trading at 3.99 times the normal volume for the stock at this time of day.
  • CARA is trading at a new high 3.01% 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 CARA:

Cara Therapeutics, Inc., a clinical-stage biopharmaceutical company, focuses on developing and commercializing chemical entities designed to alleviate pain by selectively targeting kappa opioid receptors. Currently there are 4 analysts that rate Cara Therapeutics a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Cara Therapeutics has been 212,200 shares per day over the past 30 days. Cara has a market cap of $271.2 million and is part of the health care sector and drugs industry. Shares are up 19.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cara Therapeutics as a sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, weak operating cash flow and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • CARA THERAPEUTICS INC's earnings per share declined by 40.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, CARA THERAPEUTICS INC reported poor results of -$0.78 versus -$0.10 in the prior year. For the next year, the market is expecting a contraction of 35.9% in earnings (-$1.06 versus -$0.78).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Biotechnology industry. The net income has significantly decreased by 38.6% when compared to the same quarter one year ago, falling from -$3.38 million to -$4.69 million.
  • Net operating cash flow has significantly decreased to -$5.24 million or 69.55% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 25.98%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 40.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Compared to other companies in the Biotechnology industry and the overall market, CARA THERAPEUTICS INC's return on equity significantly trails that of both the industry average and the S&P 500.

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