The Top 10: One Million Share Club

In Monday’s Goldman Guide we referenced volume as a great lagging indicator for the market.  More importantly the inconsistency of volume on high buying or high selling days or a general increase or decrease in volume should provide an indication of how investors/traders feel about a certain stock.  Coincidentally, there are 10 stocks in our Market Monitor highlights that have averaged over 1 million shares traded per day over the last three months.  Here is a quick review on each of them with a percentage gain or loss listed at the far right from the date initiated.  As expected the majority of them are in bio-tech or technology.

1.    Array BioPharma, Inc. (NASDAQ – ARRY - $4.96): +19.5%

There has been some heavy selling since the stock peaked around $6.00 late last month, highlighted by 6.5 million shares traded on a down day on June 4^th.  The short term technical analysis looks very bearish here.  The drop seems primarily due to an offering of $115M of convertible senior notes and nothing to do with products or pipelines. 

2.    Astex Pharmaceuticals, Inc. (NASDAQ – ASTX - $4.79): +61.8%

The stock peaked at $6.88 and has been on a steady decline in both price and volume following a downgrade by The Street.  It is probably time to take some profits.

3.    AVEO Pharmaceuticals, Inc. (NASDAQ – AVEO - $2.62): -67.9%

Probably time to get out here.  There was a massive sell-off in late April where the stock plummeted from the mid $7 range to current levels on about 10 to 15 million shares traded per day.  The company’s kidney cancer drug was not approved by the FDA and they are currently facing a lawsuit which that was filed in May.

4.    Glu Mobile, Inc. (NASDAQ – GLUU - $2.39): -13.1%

Technical analysis looks very bearish in the short term here.  The company continues to struggle to monetize from its mobile gaming products.  Probably time to cut your losses.

5.    Halozyme Therapeutics (NASDAQ – HALO - $6.41): +2.1%

The price/volume chart indicates that big up days are marked by larger volumes than big down days over the last few months.  The company has existing product in the market and promising drugs in the pipeline.  The company could turn to EPS profitability in the middle of 2014.  It is probably worth holding on to this one.

6.    LeapFrog Enterprises, Inc. (NYSE  – LEAP - $9.80): +9.4%

This stock finally climbed from the mid $8 range to current levels in the middle of May on heavy volume over 2 to 3 sessions of over 2 million shares traded per session.  The chart looks very bullish in the short term.  The company’s business model and earnings forecasts are enough to keep this one around.

7.    Meritor, Inc. (NYSE – MTOR - $7.17): +0.7%

It is too early to tell anything here, as we just featured this stock on June 18^th.

8.    Novavax, Inc. (NASDAQ – NVAX - $1.93): -17.9%

      NVAX has turned into a ‘cheap’ long term play.  The three most heavily traded days over the last few months have also been days when the stock went up.  This is the good news.  The bad news is that the short, intermediate, and long term charts all look very bearish.  We missed this one as far as getting a short term pop, but think that the stock may be worth hanging onto if you have the time.

9.    Rambus, Inc. (NASDAQ – RMBS - $8.89): +64.9%

This is definitely one to keep, both from a technical and fundamental perspective.  This is an LED mobile phone components player poised to make a run.

10.  Smith and Wesson Holding Corporation (NASDAQ – SWHC - $8.89): +14.4%

No surprise here as SWHC is under heavy accumulation as broad government anti-gun laws have been passed across the country.  Volume usually averages around 1 million here, but spikes on ‘news’ days as it did early this week with an announced share buyback plan.  It is probably a good idea to hold on here.

Have a great day.

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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