Trade-Ideas LLC identified

Nabors Industries

(

NBR

) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Nabors Industries as such a stock due to the following factors:

  • NBR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $65.8 million.
  • NBR has traded 3.0 million shares today.
  • NBR is trading at 1.93 times the normal volume for the stock at this time of day.
  • NBR crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize on. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on NBR:

Nabors Industries Ltd., together with its subsidiaries, provides drilling and rig services. The stock currently has a dividend yield of 2.9%. Currently there are 12 analysts that rate Nabors Industries a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Nabors Industries has been 9.4 million shares per day over the past 30 days. Nabors has a market cap of $2.3 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.70 and a short float of 2.6% with 1.42 days to cover. Shares are up 3.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Nabors Industries as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 422.1% when compared to the same quarter one year ago, falling from $123.63 million to -$398.29 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Energy Equipment & Services industry and the overall market, NABORS INDUSTRIES LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $161.51 million or 47.42% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.93%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 427.90% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • NABORS INDUSTRIES LTD 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, NABORS INDUSTRIES LTD continued to lose money by earning -$1.14 versus -$2.35 in the prior year. For the next year, the market is expecting a contraction of 44.7% in earnings (-$1.65 versus -$1.14).

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