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Trade-Ideas: Rockwell Medical (RMTI) Is Today's "Barbarian At The Gate" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Rockwell Medical (RMTI) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Rockwell Medical as such a stock due to the following factors:

  • RMTI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.7 million.
  • RMTI has traded 5.4 million shares today.
  • RMTI traded in a range 228.7% of the normal price range with a price range of $1.41.
  • RMTI traded above its daily resistance level (quality: 450 days, meaning that the stock is crossing a resistance level set by the last 450 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock s movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on RMTI:

Rockwell Medical, Inc. operates as an integrated biopharmaceutical company in the United States and internationally. Currently there are 2 analysts that rate Rockwell Medical a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Rockwell Medical has been 1.7 million shares per day over the past 30 days. Rockwell Medical has a market cap of $336.1 million and is part of the health care sector and drugs industry. The stock has a beta of 1.33 and a short float of 39.2% with 1.64 days to cover. Shares are up 4.6% year to date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Rockwell Medical as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, weak operating cash flow and generally high debt management risk.

Highlights from the ratings report include:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, ROCKWELL MEDICAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ROCKWELL MEDICAL INC is currently extremely low, coming in at 12.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -91.35% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$21.53 million or 232.03% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio of 1.16 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.71, which shows the ability to cover short-term cash needs.
  • In its most recent trading session, RMTI has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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