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 Old Dominion Freight Lines ( ODFL) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Old Dominion Freight Lines as such a stock due to the following factors:

  • ODFL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $50.3 million.
  • ODFL has traded 160,589 shares today.
  • ODFL is trading at 1.90 times the normal volume for the stock at this time of day.
  • ODFL crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in ODFL with the Ticky from Trade-Ideas. See the FREE profile for ODFL NOW at Trade-Ideas

More details on ODFL:

Old Dominion Freight Line, Inc. operates as a less-than-truckload (LTL) motor carrier in North America. It provides regional, inter-regional, and national LTL services, including ground and air expedited transportation, and consumer household pickup and delivery. ODFL has a PE ratio of 23.4. Currently there are 3 analysts that rate Old Dominion Freight Lines a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Old Dominion Freight Lines has been 626,000 shares per day over the past 30 days. Old Dominion Freight Lines has a market cap of $6.2 billion and is part of the services sector and transportation industry. The stock has a beta of 0.85 and a short float of 2.1% with 2.13 days to cover. Shares are down 6.6% year-to-date as of the close of trading on Tuesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Old Dominion Freight Lines as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • ODFL's revenue growth has slightly outpaced the industry average of 13.9%. Since the same quarter one year prior, revenues rose by 21.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ODFL's debt-to-equity ratio is very low at 0.10 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.50, which illustrates the ability to avoid short-term cash problems.
  • OLD DOMINION FREIGHT has improved earnings per share by 47.3% 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 two years. We feel that this trend should continue. During the past fiscal year, OLD DOMINION FREIGHT increased its bottom line by earning $3.10 versus $2.40 in the prior year. This year, the market expects an improvement in earnings ($3.65 versus $3.10).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Road & Rail industry average. The net income increased by 48.2% when compared to the same quarter one year prior, rising from $47.16 million to $69.87 million.
  • Net operating cash flow has increased to $113.66 million or 16.83% when compared to the same quarter last year. In addition, OLD DOMINION FREIGHT has also modestly surpassed the industry average cash flow growth rate of 7.55%.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

null