Trade-Ideas LLC identified

National Oilwell Varco

(

NOV

) 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 National Oilwell Varco as such a stock due to the following factors:

  • NOV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $120.5 million.
  • NOV has traded 1.4 million shares today.
  • NOV traded in a range 232.7% of the normal price range with a price range of $2.56.
  • NOV traded above its daily resistance level (quality: 5 days, meaning that the stock is crossing a resistance level set by the last 5 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.

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More details on NOV:

National Oilwell Varco, Inc. designs, manufactures, and sells equipment and components used in oil and gas drilling, completion, and production operations; and provides oilfield services to the upstream oil and gas industry worldwide. The stock currently has a dividend yield of 0.6%. Currently there are 6 analysts that rate National Oilwell Varco a buy, 3 analysts rate it a sell, and 17 rate it a hold.

The average volume for National Oilwell Varco has been 4.6 million shares per day over the past 30 days. National Oilwell Varco has a market cap of $12.0 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.75 and a short float of 11.4% with 11.60 days to cover. Shares are down 6.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates National Oilwell Varco as a

sell

. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • The gross profit margin for NATIONAL OILWELL VARCO INC is rather low; currently it is at 19.14%. It has decreased from the same quarter the previous year.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market on the basis of return on equity, NATIONAL OILWELL VARCO INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The share price of NATIONAL OILWELL VARCO INC has not done very well: it is down 24.34% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • NATIONAL OILWELL VARCO 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, NATIONAL OILWELL VARCO INC swung to a loss, reporting -$2.15 versus $5.71 in the prior year. This year, the market expects an improvement in earnings (-$1.00 versus -$2.15).
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Energy Equipment & Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 138.4% when compared to the same quarter one year ago, falling from $310.00 million to -$119.00 million.

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