Stocks & Investing
Stocks and Investing
Stocks and Investing
Tue, February 22, 2011 
February 22, 2011 / M2 PRESSWIRE / BUYINS.NET / http://www.squeezetrigger.com is monitoring the Biomed - Genetics sector and these stocks are the most undervalued as of today. TRANSITION THERAPEUTICS INC (NASDAQ:TTHI) are all expected to go Up as they are undervalued according to industry standard valuation metrics. The valuation model employs a three-factor approach to stock valuation using fundamental variables--the company's trailing 12-month Earnings-Per-Share (EPS), the analyst consensus estimate of the company's forecasted 12-month EPS, and the 30-year Treasury yield--to create a highly accurate reflection of a company's fair value.
The chart below displays the projected Fair Value and Valuation discount/premium of the most undervalued stocks in the highlighted industry group:
Symbol Company Name Last Close Fair Value Valuation Industry
TTHI TRANSITION THERAPEUTICS INC 1.98 7.39 73.22% undervalued Biomed - Genetics
Here are some of the variables that are utilized when calculating the Fair Market Valuation of a stock: Long-run EPS growth rate, Duration of Business-growth-cycle, Volatility of EPS growth rate, Systematic or beta risk of the firm, Correlation between the firm's EPS and the interest rate environment, EPS growth volatility, Dividend payout ratio, Buffer earnings, Interest rate related criteria: Interest rate (30 year yield) long-run level, Duration of interest rate cycle, Interest rate volatility. The Fair Market Valuation uses 12-month historic and forecasted EPS values and the current 30-year treasury yield as primary determinants. When calculating risk/return values such as the Sharpe ratio, the historic periods used are five years.
Some expected results of the Valuation Model are: the valuation of a stock increases in a declining interest rate environment. Increasing current and/or projected EPS will produce a higher Valuation. While long-term EPS growth would produce a corresponding long-term Valuation increase, concomitant long-term interest rate increases would offset EPS growth and depress the Valuation. The shorter a company's own business cycle, the higher its stock Valuation will be.
TRANSITION THERAPEUTICS INC (NASDAQ:TTHI) - Transition Therapeutics Inc., a biopharmaceutical company, develops novel therapeutics for various disease indications primarily in Canada. Its lead products include ELND-005/AZD-103, a Phase II clinical trial product for the treatment of Alzheimer's disease; and TT-223 gastrin analogue, a Phase II clinical trial product for the treatment of diabetes. The companys TT-223 gastrin analogue, includes TT-223 in combination with a GLP-1 analogue as a therapy for the treatment of type 1 and type 2 diabetes, which is under Phase 1b clinical study in type 2 diabetes patients; and TT-223 in combination with EGF analogues that has completed two Phase I clinical trials for the drug candidate in type 1 and type 2 diabetics. In addition, it has an emerging pipeline of preclinical drug candidates developed using its proprietary drug discovery engine. Transition Therapeutics Inc. has a strategic collaboration with Elan Pharma International Limited to develop and commercialize ELND-005/AZD-103 therapeutic agent, as well as a licensing and collaboration agreement with Eli Lilly and Company to develop and commercialize gastrin based therapies, including the lead compound TT-223. The company was formerly known as Transition Therapeutics and Diagnostics Inc. and changed its name to Transition Therapeutics Inc. in December 2000. Transition Therapeutics Inc. was founded in 1987 and is based in Toronto, Canada.
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