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

  • PETX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.2 million.
  • PETX has traded 77,586 shares today.
  • PETX is trading at 4.20 times the normal volume for the stock at this time of day.
  • PETX is trading at a new low 11.01% 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in PETX with the Ticky from Trade-Ideas. See the FREE profile for PETX NOW at Trade-Ideas

More details on PETX:

Aratana Therapeutics, Inc., a development-stage biopharmaceutical company, focuses on the licensing, development, and commercialization of biopharmaceutical products for the companion animals worldwide. Currently there are 8 analysts that rate Aratana Therapeutics a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Aratana Therapeutics has been 329,000 shares per day over the past 30 days. Aratana has a market cap of $615.8 million and is part of the health care sector and drugs industry. The stock has a beta of 3.67 and a short float of 10.5% with 8.09 days to cover. Shares are down 5.2% year-to-date as of the close of trading on Thursday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Aratana Therapeutics as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, ARATANA THERAPEUTICS's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to -$9.01 million or 9.68% when compared to the same quarter last year. Despite a decrease in cash flow of 9.68%, ARATANA THERAPEUTICS is still significantly exceeding the industry average of -70.80%.
  • ARATANA THERAPEUTICS has improved earnings per share by 23.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ARATANA THERAPEUTICS reported poor results of -$1.31 versus -$0.23 in the prior year. For the next year, the market is expecting a contraction of 19.1% in earnings (-$1.56 versus -$1.31).
  • PETX, with its decline in revenue, slightly underperformed the industry average of 4.9%. Since the same quarter one year prior, revenues fell by 11.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 40.38% is the gross profit margin for ARATANA THERAPEUTICS which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -5624.35% is in-line with the industry average.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.