Owens-Illinois (OI) Marked As A Barbarian At The Gate

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 Owens-Illinois ( OI) 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 Owens-Illinois as such a stock due to the following factors:

  • OI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $42.2 million.
  • OI has traded 432,626 shares today.
  • OI traded in a range 261.5% of the normal price range with a price range of $1.79.
  • OI traded above its daily resistance level (quality: 6 days, meaning that the stock is crossing a resistance level set by the last 6 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 OI:

Owens-Illinois, Inc., through its subsidiaries, manufactures and sells glass container products to food and beverage manufacturers primarily in Europe, North America, South America, and the Asia Pacific. OI has a PE ratio of 28.9. Currently there are 7 analysts that rate Owens-Illinois a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Owens-Illinois has been 1.0 million shares per day over the past 30 days. Owens-Illinois has a market cap of $5.2 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 2.34 and a short float of 1.8% with 2.38 days to cover. Shares are down 9.7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Owens-Illinois as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth, notable return on equity, solid stock price performance and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • OWENS-ILLINOIS INC has improved earnings per share by 43.6% 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 year. We feel that this trend should continue. During the past fiscal year, OWENS-ILLINOIS INC turned its bottom line around by earning $1.10 versus -$3.07 in the prior year. This year, the market expects an improvement in earnings ($2.73 versus $1.10).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 2.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Containers & Packaging industry and the overall market, OWENS-ILLINOIS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 43.63% and other important driving factors, this stock has surged by 45.76% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • Net operating cash flow has remained constant at $225.00 million with no significant change when compared to the same quarter last year. Despite stable cash flow, OWENS-ILLINOIS INC's cash flow growth rate is still lower than the industry average growth rate of 36.90%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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