Strong On High Relative Volume: Ocean Rig UDW (ORIG)

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 Ocean Rig UDW ( ORIG) as a strong 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 $7.3 million.
  • ORIG has traded 64,245 shares today.
  • ORIG is trading at 2.79 times the normal volume for the stock at this time of day.
  • ORIG is trading at a new high 3.07% 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 ORIG:

Ocean Rig UDW Inc., an offshore drilling contractor, through its subsidiaries, 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 7%. ORIG has a PE ratio of 6.8. Currently there are 3 analysts that rate Ocean Rig UDW a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Ocean Rig UDW has been 504,800 shares per day over the past 30 days. Ocean Rig UDW has a market cap of $1.4 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.51 and a short float of 2.1% with 1.27 days to cover. Shares are down 44.3% year-to-date as of the close of trading on Friday.

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 Ocean Rig UDW as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk.

Highlights from the ratings report include:
  • ORIG's very impressive revenue growth greatly exceeded the industry average of 16.0%. Since the same quarter one year prior, revenues leaped by 56.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • OCEAN RIG UDW INC reported significant earnings per share improvement 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. This trend suggests that the performance of the business is improving. During the past fiscal year, OCEAN RIG UDW INC turned its bottom line around by earning $0.48 versus -$1.00 in the prior year. This year, the market expects an improvement in earnings ($2.44 versus $0.48).
  • 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 46.90%, 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. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The debt-to-equity ratio of 1.41 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, ORIG has managed to keep a strong quick ratio of 2.03, which demonstrates the ability to cover short-term cash needs.

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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