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Trade-Ideas: Occidental Petroleum Corporation (OXY) Is Today's "Roof Leaker" 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 Occidental Petroleum Corporation ( OXY) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Occidental Petroleum Corporation as such a stock due to the following factors:

  • OXY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $348.3 million.
  • OXY has traded 713,595 shares today.
  • OXY is trading at 2.42 times the normal volume for the stock at this time of day.
  • OXY crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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

More details on OXY:

Occidental Petroleum Corporation engages in the exploration and production of oil and gas properties in the United States and internationally. The company operates in three segments: Oil and Gas; Chemical; and Midstream, Marketing and Other. The stock currently has a dividend yield of 2.8%. OXY has a PE ratio of 16.0. Currently there are 12 analysts that rate Occidental Petroleum Corporation a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for Occidental Petroleum Corporation has been 3.5 million shares per day over the past 30 days. Occidental has a market cap of $73.7 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.95 and a short float of 0.8% with 1.70 days to cover. Shares are down 3.5% 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 Occidental Petroleum Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 8.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • OXY's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.07, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for OCCIDENTAL PETROLEUM CORP is rather high; currently it is at 59.79%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 24.54% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $3,561.00 million or 40.14% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.81%.

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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