Trade Of The Week: Week Of 6-26

Last week was a good week for both of our stocks of the week. This week, we have another biotech play. According to yahoo finance, Akorn (AKRX) is a generic pharmaceutical company, engaged in the development, manufacture, and marketing of multi-source and branded pharmaceutical products in the areas of ophthalmology, antidotes, anti-infectives, and controlled substances for pain management and anesthesia in the United States and internationally. The company’s Ophthalmic segment markets diagnostic products, including mydriatics and cycloplegics, anesthetics, topical stains, gonioscopic solutions, and angiography dyes, which are used in the office setting. It also sells therapeutic products, such as antibiotics, anti-infectives, steroids, steroid combinations, glaucoma medications, decongestants/antihistamines, and anti-edema medications to wholesalers, chain drug stores, and other national account customers. In addition, this segment offers non-pharmaceutical products, including various artificial tear solutions and preservative-free lubricating ointments. The company’s Specialty Therapeutics and Injectable segment markets hospital drug and injectable pharmaceutical products, including antidotes, anti-infectives, and controlled substances for pain management and anesthesia; and other pharmaceutical products. This segment markets products to hospitals through the wholesale distribution channel. Its Contract Service segment manufactures aseptic filled and terminally sterilized ophthalmic and injectable pharmaceutical products for third party pharmaceutical customers. The company’s customers include physicians, optometrists, hospitals, surgery centers, clinics, long-term care, wholesalers, group purchasing organizations, retail pharmacies, and other pharmaceutical companies. Akorn, Inc. was founded in 1971 and is headquartered in Lake Forest, Illinois.

Yahoo also has AKRX at .24 EPS with a P/E of about 28. Cash is listed as just under $46 million with zero debt. AKRX has about 9% of the float being shorted as of June 15th.

AKRX is not far from 52-week highs from last month, showing bullishness during the downtrend. The 52-week high is currently at $7.08 and AKRX is forming a bullish wedge with very strong volume last Friday, especially into the close. This is a good sign for some more bullish action this week, if the markets don’t fall apart. The trade is to buy AKRX near a low volume pullback near $6.30 area or on a breakout on good volume past resistance around $6.92 as that presents great odds of a new 52-week high being set. I’d keep a tight stop loss just under $6.30 or a looser stop loss just under $6.18. See the chart below for visual details.

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