5 Rallying Healthcare Stocks With Negative Inventory Trends

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 |  Includes: AKRX, BMRN, BMY, EW, RDSMY
by: Kapitall

Do you consider a company's sales trends when evaluating stocks? For ideas on how to start your own sales analysis, we ran a screen you may be interested in.

We began by screening the healthcare sector for stocks currently rallying above their 20-day, 50-day, and 200-day moving averages, indicating that these stocks have strong upward momentum.

We then compared these stocks' growth in revenue to growth in inventory over the last year. We screened for stocks with negative sales trends, with faster growth in inventory than revenue over the last year. Since inventory represents the portion of goods not yet sold, slower growth in revenue than inventory is considered a negative sign.

To screen for declining liquidity, we also only focused on those companies with inventory increasing as a percent of current assets.

Do you think these companies are in hot water? Use this list as a starting point for your own analysis.

List sorted by change in revenue over the last year.

1. Amylin Pharmaceuticals, Inc. (AMLN): Engages in the discovery, development, and commercialization of drug candidates for the treatment of diabetes, obesity, and other diseases. Market cap at $4.55B, most recent closing price at $28.28. The stock is currently trading 8.26% above its 20-day moving average, 19.85% above its 50-day MA, and 89.73% above its 200-day MA. Revenue grew by 0.64% during the most recent quarter ($153.69M vs. $152.71M y/y). Inventory grew by 23.76% during the same time period ($135.51M vs. $109.49M y/y). Inventory, as a percentage of current assets, increased from 16.38% to 24.14% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

2. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN): Develops and commercializes biopharmaceuticals for serious diseases and medical conditions. Market cap at $4.47B, most recent closing price at $39.07. The stock is currently trading 4.67% above its 20-day moving average, 10.33% above its 50-day MA, and 16.05% above its 200-day MA. Revenue grew by 6.57% during the most recent quarter ($116.65M vs. $109.46M y/y). Inventory grew by 12.71% during the same time period ($124.06M vs. $110.07M y/y). Inventory, as a percentage of current assets, increased from 21.85% to 24.16% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

3. Edwards Lifesciences Corp. (NYSE:EW): Offers products and technologies designed to treat advanced cardiovascular disease worldwide. Market cap at $10.02B, most recent closing price at $87.45. The stock is currently trading 2.99% above its 20-day moving average, 12.18% above its 50-day MA, and 18.93% above its 200-day MA. Revenue grew by 13.52% during the most recent quarter ($459.2M vs. $404.5M y/y). Inventory grew by 23.24% during the same time period ($268.3M vs. $217.7M y/y). Inventory, as a percentage of current assets, increased from 18.93% to 22.58% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

4. Kensey Nash Corporation (KNSY): Engages in the field of regenerative medicine utilizing its proprietary collagen and synthetic polymer technology to help repair damaged or diseased tissues. Market cap at $335.12M, most recent closing price at $38.49. The stock is currently trading 3.98% above its 20-day moving average, 20.52% above its 50-day MA, and 47.94% above its 200-day MA. Revenue grew by 19.2% during the most recent quarter ($22.16M vs. $18.59M y/y). Inventory grew by 55.38% during the same time period ($15.15M vs. $9.75M y/y). Inventory, as a percentage of current assets, increased from 17.17% to 21.59% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

5. Akorn, Inc. (NASDAQ:AKRX): Engages in the manufacture and marketing of diagnostic and therapeutic pharmaceutical products, hospital drugs, and injectable pharmaceuticals in the United States and internationally. Market cap at $1.3B, most recent closing price at $13.71. The stock is currently trading 6.23% above its 20-day moving average, 11.47% above its 50-day MA, and 28.90% above its 200-day MA. Revenue grew by 103.3% during the most recent quarter ($51.72M vs. $25.44M y/y). Inventory grew by 108.47% during the same time period ($41.34M vs. $19.83M y/y). Inventory, as a percentage of current assets, increased from 24.24% to 37.28% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.