Trade-Ideas: Omega Healthcare Investors (OHI) Is Today's

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 Omega Healthcare Investors ( OHI) 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 Omega Healthcare Investors as such a stock due to the following factors:

  • OHI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.3 million.
  • OHI has traded 2.9 million shares today.
  • OHI traded in a range 224.5% of the normal price range with a price range of $1.36.
  • OHI traded above its daily resistance level (quality: 12 days, meaning that the stock is crossing a resistance level set by the last 12 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 OHI:

Omega Healthcare Investors, Inc. is a real estate investment firm. The firm invests in the real estate markets of United States. It invests in healthcare facilities, primarily in long-term healthcare facilities in order to create its portfolio. Omega Healthcare Investors, Inc. The stock currently has a dividend yield of 6.2%. OHI has a PE ratio of 22. Currently there are 3 analysts that rate Omega Healthcare Investors a buy, 2 analysts rate it a sell, and 2 rate it a hold.

The average volume for Omega Healthcare Investors has been 1.9 million shares per day over the past 30 days. Omega Healthcare Investors has a market cap of $6.3 billion and is part of the financial sector and real estate industry. The stock has a beta of 0.30 and a short float of 3.1% with 3.81 days to cover. Shares are down 9.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Omega Healthcare Investors as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • OHI's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 10.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $103.29 million or 32.33% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.76%.
  • The gross profit margin for OMEGA HEALTHCARE INVS INC is rather high; currently it is at 64.47%. Regardless of OHI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OHI's net profit margin of 32.22% compares favorably to the industry average.
  • OMEGA HEALTHCARE INVS INC's earnings per share declined by 28.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, OMEGA HEALTHCARE INVS INC increased its bottom line by earning $1.74 versus $1.46 in the prior year. For the next year, the market is expecting a contraction of 13.8% in earnings ($1.50 versus $1.74).
  • The share price of OMEGA HEALTHCARE INVS INC has not done very well: it is down 5.62% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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