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Tickers in this Article: MDCO, TMO, QCOR, EW, AMSG, REGN, VVUS
After the morning's trading, the Nasdaq has fallen 0.8%, the S&P 500 has fallen 0.2% and the Dow has moved up 0.4%. The healthcare sector is the category of stocks relating to medical and healthcare goods or services. This sector includes hospital management firms, health maintenance organizations (HMOs), biotechnology and a variety of medical products. Stocks in the healthcare sector are often considered to be defensive because the products and services are essential. Even during economic downturns, people will still require medical aid and medicine to overcome illness. Having a consistent demand for goods and services makes this sector less sensitive to business cycle fluctuations.

The Healthcare sector (XLV) has risen 0.1% so far today and here are its biggest movers:
CompanyMarket CapPercentage Change
The Medicines Company (Nasdaq:MDCO)$1.26 billion+10.7%
Thermo Fisher (NYSE:TMO)$18.28 billion+7.4%
Questcor Pharmaceuticals, Inc. (Nasdaq:QCOR)$2.81 billion-5.3%
Edwards Lifesciences (NYSE:EW)$11.31 billion+4.2%
Amsurg Corp (Nasdaq:AMSG)$939.6 million-3.7%
Regeneron Pharmaceuticals Inc (Nasdaq:REGN)$11.55 billion+3.6%
VIVUS, Inc. (Nasdaq:VVUS)$2.29 billion-3.4%
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Medicines (Nasdaq:MDCO) has soared 10.7% to reach a current price of $25.32 per share. With 737,820 shares changing hands so far today, the company's volume is 1.3 times the average volume over the last three months. High volume indicates a lot of investor interest while low volume indicates the opposite. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. One of the favorite tools of many value investors is analyzing price/book value ratios, as it provides a measure of the underlying value of a company's assets as compared to the valuation of its equity. MDCO's P/B ratio of 2.65 shows that its share price is higher than its book value. It is important to take the company's debt into account when using the P/B ratio as debt can boost a company's liabilities to the point where they wipe out much of the book value of its hard assets, creating artificially high P/B values. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: Investment Valuation Ratios: Price/Book Value Ratio

Increasing 7.4%, Thermo Fisher (NYSE:TMO) is trading at $53.46 per share. The company's volume for the day so far is 2.5 million shares. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. Valuation ratios include the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. The dividend yield is calculated by dividing a company's dividends per share by its stock price. The dividend yield for TMO is 1%, which is on the low end. A company with a low dividend yield may be a safer investment in the long run. High dividend yields are generally more important to value investors, investors in larger companies, and income oriented investors than they are to growth investors, investors in small cap stocks, and investors in new or emerging companies. SEE: Guide To Stock-Picking Strategies: Income Investing

Questcor Pharmaceuticals (Nasdaq:QCOR) is currently trading at a share price of $42.24, a 5.3% decline. The company's volume is currently 1.7 million shares for the day, in keeping with its current daily average. Volume is an important indicator because it indicates how significant a price shift is. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The price/sales ratio measures a company's stock market value by its total revenues or alternatively, a company's price per share by its revenue per share. The P/S ratio for QCOR is a high 8.55. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. It is important to compare P/S ratios for companies in the same industry, as ratios can vary quite widely for companies in different industries.

Edwards Lifesciences (NYSE:EW) has moved up 4.2% and is currently trading at $102.84 per share. The company's volume is currently 1.6 million shares. Yesterday, volume was only 928,614 shares. As a stock moves up or down, it is important to pay attention to the trading volume. This indicates the level of interest: the higher the volume, the more the interest. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The debt ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. EW has a low debt ratio of 30.6%. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.

Amsurg (Nasdaq:AMSG) has fallen 3.7% and is currently trading at $28.60 per share. The company's volume is currently 102,322 shares for the day, consistent with its current three-month average. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. While investment valuation ratios are useful tools in estimating the attractiveness of an investment, remember that it is important to look at a company's historical performance and compare the company ratios with its competitors and industry overall. A company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. The capitalization ratio for AMSG is 41%. This ratio is considered to be one of the more meaningful of the "debt" ratios - it delivers the key insight into the use of leverage by a company.

Regeneron Pharmaceuticals (Nasdaq:REGN) has increased to a share price of $125.86, a 3.6% rise. This morning, the company is trading a volume of 2.1 million shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. The debt-equity (D/E) ratio compares the total liabilities for a company to its total shareholder equity. REGN's D/E ratio is 87%. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

After a decline of 3.4%, VIVUS (Nasdaq:VVUS) has hit a share price of $22.21. So far today, the company's volume is 1.8 million shares, 0.1 times the average daily volume. Volume indicates the level of interest that investors have in a company at its current price. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. The price/book value ratio provides a way of evaluating whether a stock is relatively cheap or expensive. The P/B ratio for VVUS is 6.79, indicating that the stock is trading for more than its book value. This implies that investors expect management to create more value from a given set of assets and/or that the market value of the firm's assets is significantly higher than their accounting value. A weakness of the P/B value ratio is that while the price component is easily determined by looking at the stock quote, the book value component is more difficult to estimate and more open to individual interpretation and analysis. SEE: Using The Price-To-Book Ratio To Evaluate Companies

The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Daily stock performance should be weighed against historical performance and put in context of the market overall. Tools like valuation ratios and profit margins, however, are only as useful as the context you put them in; remember to take historical data and competitor performance into account.

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