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Roof Leaker To Watch: Occidental Petroleum Corporation (OXY)

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 $272.2 million.
  • OXY has traded 2.8 million shares today.
  • OXY is trading at 2.73 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 is engaged in the acquisition, exploration, and development 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 3%. OXY has a PE ratio of 13.2. 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 3.8 million shares per day over the past 30 days. Occidental has a market cap of $77.3 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.96 and a short float of 0.9% with 2.33 days to cover. Shares are up 2.3% year-to-date as of the close of trading on Wednesday.

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, increase in stock price during the past year, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:

  • OXY's revenue growth has slightly outpaced the industry average of 7.8%. Since the same quarter one year prior, revenues slightly increased by 0.0%. 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 0.16 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 1.08, which illustrates the ability to avoid short-term cash problems.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The gross profit margin for OCCIDENTAL PETROLEUM CORP is rather high; currently it is at 57.52%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 26.62% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $3,141.00 million or 11.66% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -23.54%.

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