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Tickers in this Article: ELGX, AMRN, WOOF, HMSY, HLS, GILD, IPCM
It's been a good morning for the market. The Nasdaq is up 1.4%; the S&P 500 has risen 1.1%; and the Dow has climbed 0.8%. 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.

Outperforming the market overall, the Healthcare sector (XLV) is up 1.6% and its biggest movers so far today are:
CompanyMarket CapPercentage Change
Endologix, Inc. (Nasdaq:ELGX)$812.9 million-9.6%
Amarin Corporation plc (ADR) (Nasdaq:AMRN)$2.08 billion-8.5%
VCA Antech, Inc. (Nasdaq:WOOF)$1.71 billion-7.8%
HMS Holdings Corp. (Nasdaq:HMSY)$2.71 billion+7.3%
HEALTHSOUTH Corp. (NYSE:HLS)$2.19 billion-6.1%
Gilead Sciences (Nasdaq:GILD)$39.14 billion+5.5%
IPC The Hospitalist Company, Inc. (Nasdaq:IPCM)$730.5 million-4.7%
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At $12.58, Endologix (Nasdaq:ELGX) has slipped 9.6%. With 1.6 million shares changing hands so far today, the company's volume is 6.1 times the average volume over the last three months. If a stock price moves on high volume, this means that the change is a significant one. When estimating the value of a particular investment, valuation ratios provide a good basis for assessing the value of an individual 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. ELGX's stock is trading for more than its book value with a P/B ratio of 11.98. 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. All else being equal, a stock with a low P/B value ratio is more attractive than a stock with a high ratio. SEE: How Buybacks Warps The Price-To-Book Ratio

Amarin Corporation plc (Nasdaq:AMRN) has fallen 8.5% and is currently trading at $14.01 per share. The company is trading at a volume of 15.1 million shares. Yesterday, volume was only six million shares. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made a strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the 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 ratio gives users a quick measure of the amount of debt that the company has on its balance sheets compared to its assets. AMRN's debt ratio of 124.7% is fairly high. As such, the company is highly leveraged and not highly liquid. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

VCA Antech (Nasdaq:WOOF) is down 7.8% to reach $17.99 per share. The company's volume is currently two million shares for the day, 2.5 times its current daily average. A stock's volume conveys how excited investors are about it. 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. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. WOOF has a D/E ratio of 57%. The D/E ratio is not a pure measurement of a company's debt because it includes operational liabilities in total liabilities.

Rising 7.3%, HMS (Nasdaq:HMSY) is currently trading at $33.86 per share. The company is currently trading a volume of 552,088 shares. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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. HMSY's capitalization ratio is 44%. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

Slipping 6.1%, HEALTHSOUTH (NYSE:HLS) is currently trading at $21.54 per share. At 509,159 shares, the company's volume so far today is 1.1 times its current three-month average. In technical analysis, trading volume is used to determine the strength of a market indicator. Investment valuation ratios provide investors with an estimation, albeit a simplistic one, of the value of a stock. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. The P/E ratio for HLS is 14.4, above the industry average of 12.53. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: The P/E Ratio: A Good Market-Timing Indicator

Gilead (Nasdaq:GILD) has moved up 5.5% and is currently trading at $54.53 per share. The company's volume for the day so far is 6.9 million shares. Yesterday's volume was only 5.4 million shares. High volume indicates a lot of investor interest while low volume indicates the opposite. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. As with most ratios, comparisons of company price/earnings to growth ratios (PEG ratios) are most appropriate for similar companies. PEG ratio for GILD is 0.99. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.

IPC The Hospitalist Company (Nasdaq:IPCM) has decreased to $42.03 per share, a 4.7% fall. The company's volume is currently 276,462 shares for the day, 2.8 times the current daily average. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. 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. IPCM has a P/B ratio of 3.1 which shows that its share price is higher than its book value. This high share price relative to asset value is likely to indicate that the company has been earning a very high return on its assets. P/B has its shortcomings but is still widely used as a valuation metric, more relevant for use by investors looking at capital-intensive or finance-related businesses, such as banks; book value does not carry much meaning for service-based firms with few tangible assets. 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. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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