A stock that has been on my radar for quite some time and flashed a buy signal last week is $VRX, a growing pharmaceutical and drug delivery company. Late last week $VRX experienced an RSI Crossover Buy Signal, however we did not buy into the stock because it was due to report earnings Monday morning.
The earnings were better than expected and after a wild day the stock closed with a 5.5% gain and is back above its 50-day moving average. Revenue jumped 34% in the quarter and more than doubled in 2011 versus the prior year.
Net income for 2011 came in at 49 cents per share, which is not bad. However, it expects earnings per share in 2012 to be between $3.95 and $4.20. Analysts expect $4.08 per share.
Based on earnings of $4.08 in 2012, the stock trades with a P/E ratio of 12.4 and a PEG ratio below 1.0. This makes $VRX undervalued at current prices ($50.58).
The key is to watch trading the next few days after the big volume earnings day on Monday and determine what a good entry price if for the stock. Key levels are the 50-day MA at $47.50 and resistance at $51.50.
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