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Momentum

HiTech Pharmacal Co, Inc. (HITK) just hit a new all-time high after reporting strong Q3 results that included an impressive 35% earnings surprise. With estimates on the rise and a high industry rank, this Zacks #1 rank stock is a solid pick for momentum.

Company Description

Hi Tech Pharmacal Co, Inc. is a specialty pharmaceutical company that develops, manufactures and sells generic, prescription and OTC drugs and nutritional products in the United States. The company was founded in 1982 and has a market cap of $505 million.

Third-Quarter Results

Revenue for the period was up 27% from last year to $57 million. Earnings also came in strong at $1.04, 35% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 34% over the last four quarters.

The good quarter was driven by strong results from its generic pharmaceuticals division, where sales jumped 33% from last year to $49 million. The company also saw its margins expand, with cost of good sold falling to 41% of sales from 44% last year.

Financial Profile

Hi Tech will continue to benefit from its strong financial profile, with cash and short-term investments up 60% from last year to $72 million against no long-term debt.

Estimates

We saw some fairly bullish movement in estimates off the good quarter, with the current year up close to 20% in the last two months to $3.61.

Valuation

With a forward P/E of 11X, HITK trades at a discount to the industry average of 14X.

12-Month Chart

On the chart, shares have been rallying since October, recently hitting a new all-time high on the good quarter. Look for support from the trend on any weakness. Take a look below.

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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Whisper Trader Service.

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