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Endocyte Inc. (NASDAQ: ECYT) technicals should not be ignored

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In the spirit of strong objective analysis, we are going to take a close look at Endocyte Inc. (NASDAQ: ECYT) from a technical chartist point of view today.

In short, technical analysis assumes that all publicly available facts about a stock are already discounted by knowledgeable buyers and sellers. And it is from there that the real work begins: examining the stocks behavior on the chart.

As such, we will begin with a quick check of the primary oscillators: the 14-day Relative Strength Indicator (RSI) and the 20-day fast stochastic. Both of these measures report on the degree to which a security is overbought or oversold ie, whether it has gone too far too fast in one direction or the other, and some kind of mean-reversion is called for. In each case, an indicator score of above 75 is considered overbought, while a score under 25 is considered oversold. In the case of Endocyte Inc., the 14-day RSI stands at 78.88%, while the past month of action shows a score of 81.02% on the fast stochastic.

Well, what if we now look away from mean-reversion and towards the concept of trend That comprises our next step. To do this, we will start off by examining the most common systematic technical method of determining the direction of long-term trend in a stock: moving averages.

In the most basic sense, we can see that ECYT has recently been exhibiting a bearing on the chart that suggests an overall bearish mode of behavior. This read comes from a look at the relative positioning of the 50-day and 200-day simple moving averages: if the 50-day is trading above the 200-day, momentum is to the upside making a bull case for trend; if the 50-day is trading below the 200-day, momentum is to the downside, making a bear case for trend. In this example, that system makes a bearish case, which naturally implies a negative money flow scenario for the stock.

So, we’ve spent some time looking at price as a factor. But what about volume In fact, many technicians view volume as more important than price. Volume defines the total level of participation involved in a stock. Its a coefficient of meaning that should be metaphorically multiplied times price action to equal conviction. In this case, we want to examine relative volume measures to get a feel for interest in the stock of late. Right now, this stock has been showing strong relative volume, which indicates interest among those making a market for shares of the stock.

Next, we will turn to key levels. We always like to start this with a look at the key Fib levels. Fib refers to Fibonacci, which is the number series that works toward a ratio limit of the Golden Ratio, often found as a key in nature as well as markets. In this case, the critical 38.2% level drawn off the 52-week low of $1.17 sits at $3.23. ECYT also has additional resistance above at the stocks 200-day simple moving average, which sits at $ 2.07.

While price action, trends, and volume are important, for traders, volatility may be as important as anything in defining the potential opportunity in a stock. Hence, we want to take a moment and consider this stocks overall range of movement, as well as its relative performance.

ECYT has moved $+3.82 over the past month or so. Over the trailing 100 days, the stock is outperforming the S&P 500 by 78.8%. This movement has come on a more volatile bearing from one day to the next relative to the broader market, according to the stocks 36-month beta. Similarly, we can see that the stocks recent action has come on a historical volatility score of 363.85%. To get that score, one has to take the standard deviation of returns for a random trading input assuming buying the stock at a given average price during the specified period.

On a more basic level, one might look at the 20-day ATR as a percentage of its 20-day moving average. That measure gives us a volatility score of 15.83%. Naturally, we will continue to keep close tabs on the stock and update this picture again soon.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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Ford Motor Company (F) finding value is an unloved sector

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Our task today will be to comprehensively evaluate recent data for Ford Motor Company (F) to determine whether or not we have something approaching a “value” in the market.

In the most basic sense, the “value investing” methodology really has its roots in the college textbook “Security Analysis”, which was published six decades ago by Graham and Dodd. But today, the term “value investing” is generally applied to any approach that focuses first and foremost on the concept of valuation, seeking out viable companies that are “cheap” based on various measures.

In this case, the company’s forward price-to-earnings ratio — perhaps the most common default measure of valuation — is currently at 7.92. That’s based on estimates looking for earnings of 0.48 coming up the pike in the company’s next financial report card.

That said, we all know that the forward data on a stock like this requires faith in those making projections: the analysts. Currently, the forward projections are driven by a group of 20 analysts. And, naturally, no one knows if those 20 folks are way off base for some reason. It’s happened before. That’s why some investing legends only trust the trailing earnings data.

In this case, that valuation ration is sitting right at 12.67.

However, to get a real sense of how this measures up, we will need to dig deeper. Benjamin Graham, the legendary value investor and one of the authors of the seminal text mentioned above, commonly relied on a simple formula for more aggressive investments: Current assets should be at least 1½ times current liabilities, debt should not be more than 110% of net current assets, there should be some level of dividend payments, and the Price-to-book-value ratio should be less than 120% of net tangible assets.

With that in mind, let’s see how Ford Motor Company (F) stacks up to this challenge.

First off, the company’s current ratio (the ration of current assets to current liabilities) is sitting at 1.20. Remember, according to Graham, that should be at least 1.5. Next, we can see debt-to-equity at 451.22. In addition, if you search the company’s recent dividend rate, you will get 0.60. How about price-to-book ratio? Right now, it clocks in at 1.48.

That should speak to what Graham might say if he came across this stock at its current price. But there are certainly other factors involved in the concept of value in today’s market that should be appreciated.

For example, Ford Motor Company (F) has managed to generate a return on its assets of 0.80%. That has been achieved through operating margins of 2.03%. Naturally, in the most basic sense, the concept of value is rooted in an ability to generate returns on invested capital. It is fundamentally about gaining access to the machine that has demonstrated its capability to generate those returns, and to do so for a price that is beneath what it is truly worth.

Perhaps the final measure that speaks to this idea is what investors currently have to pay for the company’s sales. In this case, the company’s price-to-sales ratio currently clocks in at 0.31.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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Castle Brands Inc. (ROX) beta you simply cannot ignore

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Our task today will be to comprehensively evaluate recent data for Castle Brands Inc. (ROX) to determine whether or not we have something approaching a “value” in the market.

In the most basic sense, the “value investing” methodology really has its roots in the college textbook “Security Analysis”, which was published six decades ago by Graham and Dodd. But today, the term “value investing” is generally applied to any approach that focuses first and foremost on the concept of valuation, seeking out viable companies that are “cheap” based on various measures.

In this case, the company’s forward price-to-earnings ratio — perhaps the most common default measure of valuation — is currently at 61.00. That’s based on estimates looking for earnings of 0 coming up the pike in the company’s next financial report card.

That said, we all know that the forward data on a stock like this requires faith in those making projections: the analysts. Currently, the forward projections are driven by a group of 1 analysts. And, naturally, no one knows if those 1 folks are way off base for some reason. It’s happened before. That’s why some investing legends only trust the trailing earnings data.

In this case, that valuation ration is sitting right at -203.33.

However, to get a real sense of how this measures up, we will need to dig deeper. Benjamin Graham, the legendary value investor and one of the authors of the seminal text mentioned above, commonly relied on a simple formula for more aggressive investments: Current assets should be at least 1½ times current liabilities, debt should not be more than 110% of net current assets, there should be some level of dividend payments, and the Price-to-book-value ratio should be less than 120% of net tangible assets.

With that in mind, let’s see how Castle Brands Inc stacks up to this challenge.

First off, the company’s current ratio (the ration of current assets to current liabilities) is sitting at 3.06. Remember, according to Graham, that should be at least 1.5. Next, we can see debt-to-equity at 822.46. In addition, if you search the company’s recent dividend rate, you will get N/A. How about price-to-book ratio? Right now, it clocks in at 110.91.

That should speak to what Graham might say if he came across this stock at its current price. But there are certainly other factors involved in the concept of value in today’s market that should be appreciated.

For example, Castle Brands Inc. (ROX) has managed to generate a return on its assets of 2.48%. That has been achieved through operating margins of 2.87%. Naturally, in the most basic sense, the concept of value is rooted in an ability to generate returns on invested capital. It is fundamentally about gaining access to the machine that has demonstrated its capability to generate those returns, and to do so for a price that is beneath what it is truly worth.

Perhaps the final measure that speaks to this idea is what investors currently have to pay for the company’s sales. In this case, the company’s price-to-sales ratio currently clocks in at 2.72.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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Tesla, Inc. (TSLA) beta you simply cannot ignore

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Our task today will be to comprehensively evaluate recent data for Tesla, Inc. (TSLA) to determine whether or not we have something approaching a “value” in the market.

In the most basic sense, the “value investing” methodology really has its roots in the college textbook “Security Analysis”, which was published six decades ago by Graham and Dodd. But today, the term “value investing” is generally applied to any approach that focuses first and foremost on the concept of valuation, seeking out viable companies that are “cheap” based on various measures.

In this case, the company’s forward price-to-earnings ratio — perhaps the most common default measure of valuation — is currently at -171.95. That’s based on estimates looking for earnings of -1.7 coming up the pike in the company’s next financial report card.

That said, we all know that the forward data on a stock like this requires faith in those making projections: the analysts. Currently, the forward projections are driven by a group of 19 analysts. And, naturally, no one knows if those 19 folks are way off base for some reason. It’s happened before. That’s why some investing legends only trust the trailing earnings data.

In this case, that valuation ration is sitting right at -69.46.

However, to get a real sense of how this measures up, we will need to dig deeper. Benjamin Graham, the legendary value investor and one of the authors of the seminal text mentioned above, commonly relied on a simple formula for more aggressive investments: Current assets should be at least 1½ times current liabilities, debt should not be more than 110% of net current assets, there should be some level of dividend payments, and the Price-to-book-value ratio should be less than 120% of net tangible assets.

With that in mind, let’s see how Tesla, Inc stacks up to this challenge.

First off, the company’s current ratio (the ration of current assets to current liabilities) is sitting at 0.97. Remember, according to Graham, that should be at least 1.5. Next, we can see debt-to-equity at 145.20. In addition, if you search the company’s recent dividend rate, you will get N/A. How about price-to-book ratio? Right now, it clocks in at 11.01.

That should speak to what Graham might say if he came across this stock at its current price. But there are certainly other factors involved in the concept of value in today’s market that should be appreciated.

For example, Tesla, Inc. (TSLA) has managed to generate a return on its assets of -2.10%. That has been achieved through operating margins of -6.33%. Naturally, in the most basic sense, the concept of value is rooted in an ability to generate returns on invested capital. It is fundamentally about gaining access to the machine that has demonstrated its capability to generate those returns, and to do so for a price that is beneath what it is truly worth.

Perhaps the final measure that speaks to this idea is what investors currently have to pay for the company’s sales. In this case, the company’s price-to-sales ratio currently clocks in at 5.59.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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