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Trade-Ideas: OfficeMax (OMX) Is Today's "Barbarian At The Gate" Stock

Stock quotes in this article: OMX

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 OfficeMax ( OMX) 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 OfficeMax as such a stock due to the following factors:

  • OMX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.1 million.
  • OMX has traded 579,289 shares today.
  • OMX traded in a range 5225% of the normal price range with a price range of $22.43.
  • OMX traded above its daily resistance level (quality: 531 days, meaning that the stock is crossing a resistance level set by the last 531 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in OMX with the Ticky from Trade-Ideas. See the FREE profile for OMX NOW at Trade-Ideas

More details on OMX:

OfficeMax Incorporated, together with its subsidiaries, distributes business-to-business and retail office products. The stock currently has a dividend yield of 0.5%. OMX has a PE ratio of 2.9. Currently there are 4 analysts that rate OfficeMax a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for OfficeMax has been 1.7 million shares per day over the past 30 days. The stock has a beta of 1.72 and a short float of 17.4% with 9.56 days to cover. Shares are up 53.5% year to date as of the close of trading on Friday.

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 OfficeMax as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, notable return on equity and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, OMX's share price has jumped by 103.80%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, OMX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, OFFICEMAX INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • OMX, with its decline in revenue, underperformed when compared the industry average of 19.6%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • OFFICEMAX INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, OFFICEMAX INC increased its bottom line by earning $4.71 versus $0.37 in the prior year. For the next year, the market is expecting a contraction of 89.4% in earnings ($0.50 versus $4.71).

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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