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.

Trade-Ideas LLC identified

Omega Healthcare Investors

(

OHI

) 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 Omega Healthcare Investors as such a stock due to the following factors:

  • OHI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $111.8 million.
  • OHI has traded 2.2 million shares today.
  • OHI is trading at 2.26 times the normal volume for the stock at this time of day.
  • OHI 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.

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More details on OHI:

Omega Healthcare Investors, Inc. is a real estate investment firm. The firm invests in the real estate markets of United States. It invests in healthcare facilities, primarily in long-term healthcare facilities in order to create its portfolio. Omega Healthcare Investors, Inc. The stock currently has a dividend yield of 3.6%. OHI has a PE ratio of 23.1. Currently there are 3 analysts that rate Omega Healthcare Investors a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Omega Healthcare Investors has been 1.9 million shares per day over the past 30 days. Omega Healthcare Investors has a market cap of $5.6 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.32 and a short float of 10.8% with 3.74 days to cover. Shares are up 2.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Omega Healthcare Investors as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • OHI's revenue growth has slightly outpaced the industry average of 9.9%. Since the same quarter one year prior, revenues rose by 19.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, OMEGA HEALTHCARE INVS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for OMEGA HEALTHCARE INVS INC is rather high; currently it is at 68.74%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 43.39% significantly outperformed against the industry average.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • OMEGA HEALTHCARE INVS INC has improved earnings per share by 15.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, OMEGA HEALTHCARE INVS INC increased its bottom line by earning $1.74 versus $1.46 in the prior year. This year, the market expects an improvement in earnings ($1.85 versus $1.74).

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