Trade-Ideas: OM Group (OMG) Is Today's Strong On High Relative Volume Stock

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 OM Group ( OMG) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified OM Group as such a stock due to the following factors:

  • OMG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.7 million.
  • OMG has traded 176,651 shares today.
  • OMG is trading at 15.45 times the normal volume for the stock at this time of day.
  • OMG is trading at a new high 3.06% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into 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. 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 OMG:

OM Group, Inc. operates as a technology-driven industrial company worldwide. It operates through Magnetic Technologies, Battery Technologies, and Specialty Chemicals segments. The stock currently has a dividend yield of 1.2%. OMG has a PE ratio of 24.2. Currently there are 2 analysts that rate OM Group a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for OM Group has been 243,700 shares per day over the past 30 days. OM Group has a market cap of $799.1 million and is part of the basic materials sector and chemicals industry. The stock has a beta of 2.32 and a short float of 4.7% with 6.19 days to cover. Shares are down 29.5% year-to-date as of the close of trading on Tuesday.

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

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates OM Group as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and poor profit margins.

Highlights from the ratings report include:
  • OMG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.25, which illustrates the ability to avoid short-term cash problems.
  • OMG, with its decline in revenue, underperformed when compared the industry average of 9.2%. Since the same quarter one year prior, revenues slightly dropped by 1.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for OM GROUP INC is currently lower than what is desirable, coming in at 29.87%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.39% trails that of the industry average.
  • Net operating cash flow has decreased to $22.00 million or 39.69% 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.

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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