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

Ocean Rig UDW

(

ORIG

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Ocean Rig UDW as such a stock due to the following factors:

  • ORIG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.0 million.
  • ORIG has traded 167,920 shares today.
  • ORIG is trading at 2.36 times the normal volume for the stock at this time of day.
  • ORIG is trading at a new low 7.07% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. 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 (or avoid losses by trimming weak positions). 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 ORIG:

Ocean Rig UDW Inc., an offshore drilling contractor, provides oilfield services for offshore oil and gas exploration, development, and production drilling. It specializes in the ultra-deepwater and harsh-environment segment of the offshore drilling industry. The stock currently has a dividend yield of 21.2%. ORIG has a PE ratio of 2. Currently there are 3 analysts that rate Ocean Rig UDW a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for Ocean Rig UDW has been 1.9 million shares per day over the past 30 days. Ocean Rig UDW has a market cap of $475.0 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.82 and a short float of 10% with 2.12 days to cover. Shares are down 60.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Ocean Rig UDW as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and attractive valuation levels. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 22.4%. Since the same quarter one year prior, revenues rose by 11.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Despite the current debt-to-equity ratio of 1.51, it is still below the industry average, suggesting that this level of debt is acceptable within the Energy Equipment & Services industry. Despite the fact that ORIG's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.94 is high and demonstrates strong liquidity.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, OCEAN RIG UDW INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • ORIG's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 79.72%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

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