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Tickers in this Article: BRLI, UTHR, ELN, FRX, WX, ICUI, CELG
The market is currently down, with the Nasdaq slipping 0.9%, the S&P 500 down 0.7% and the Dow declining 0.7%. 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) is down 0.5%, outperforming the market overall. Currently, the biggest movers in the sector are:
CompanyMarket CapPercentage Change
Bio-Reference Laboratories (Nasdaq:BRLI)$789.2 million-9.4%
United (Nasdaq:UTHR)$2.86 billion-2.5%
Elan Corporation, plc (NYSE:ELN)$6.63 billion+1.9%
Forest Labs (NYSE:FRX)$9.21 billion+1.8%
WuXi PharmaTech (Cayman) Inc (NYSE:WX)$1.01 billion+1.7%
ICU Medical (Nasdaq:ICUI)$804.4 million-1.5%
Celgene (Nasdaq:CELG)$30.9 billion-1.3%
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Bio-Reference Laboratories (Nasdaq:BRLI) has decreased to $25.84 per share, a 9.4% fall. The company's volume is currently 527,345 shares for the day, above yesterday's volume of 375,165 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. 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. BRLI's capitalization ratio is 2.1%, which is relatively low. A low capitalization ratio can signify a failure to leverage equity into investment, missing valuable opportunities for growth and expansion. Prudent use of leverage (debt) increases the financial resources available to a company for growth and expansion.

After a decline of 2.5%, United (Nasdaq:UTHR) has hit a share price of $53.95. So far today, 236,342 shares have changed hands. The trading volume for a stock indicates the level of investor interest. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. 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. UTHR has a low debt-equity ratio of 27%. This shows that the company's assets are financed primarily through equity. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.

Elan Corporation, plc (NYSE:ELN) has risen 1.9% to hit a current price of $11.51 per share. The company's volume for the day so far is 2.8 million shares, one times the current three-month average. 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. A company's investment value can be estimated using valuation ratios such as 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 price/book value ratio is especially important for value investors as it can provide an indication of the true value of a company's assets at a time when its business model may be failing. ELN's stock is trading for more than its book value with a P/B ratio of 8.72. This may be a sign that the company is overvalued. 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: Using The Price-To-Book Ratio To Evaluate Companies

Forest Labs (NYSE:FRX) has risen 1.8% and is currently trading at $35.27 per share. So far this morning, 1.6 million shares have changed hands. This is 0.9 times its average daily volume. A stock's volume conveys how excited investors are about it. 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. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. FRX has a P/E ratio of 12.0. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: How To Find P/E And PEG Ratios

After rising 1.7%, WuXi PharmaTech (Cayman) Inc (NYSE:WX) is currently trading at a share price of $14.50. So far today, 76,708 shares have changed hands, consistent with the volume from yesterday. In technical analysis, trading volume is used to determine the strength of a market indicator. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio measures the leverage of a company, and a company's leverage is a good way to assess risk. The debt ratio for WX is a low 20.1%. This indicates that the company engages in conservative financing with opportunities to borrow in the future at no significant risk. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

ICU Medical (Nasdaq:ICUI) is trading at $55.55 per share, down 1.5%. The company's volume for the day so far is 15,306 shares. If a stock price makes a big move up or down, volume lets us know the significance of that move. A company's value as an investment is more easily estimated using valuation ratios such as 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 price/sales ratio is used for spotting recovery situations or for double-checking that a company's growth has not become overvalued. ICUI's P/S ratio of 2.49 is on the high side. 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 keep in mind when looking at the P/S ratio that just because a company is generating revenues, this does not mean that the company is profitable, and in the long run, profits drive stock prices.

Currently trading at $70.68 per share, Celgene (Nasdaq:CELG) has fallen 1.3%. The company's volume is currently 486,859 shares for the day, 0.2 times its average over the past three months. If a stock price moves on high volume, this means that the change is a significant one. 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 capitalization ratio is calculated by dividing long-term debt by the sum of long-term debt and shareholders' equity. CELG has a low capitalization ratio of 17.6%. A very low capitalization ratio might be a sign that the company is stagnating and reducing the potential earnings for shareholders. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

The Bottom Line On any given day, a particular stock may see positive or negative change in its share price. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. 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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