Barbarian At The Gate: Omnicare (OCR)

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 Omnicare ( OCR) 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 Omnicare as such a stock due to the following factors:

  • OCR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $163.5 million.
  • OCR has traded 1.0 million shares today.
  • OCR traded in a range 260% of the normal price range with a price range of $0.83.
  • OCR traded above its daily resistance level (quality: 45 days, meaning that the stock is crossing a resistance level set by the last 45 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.

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

More details on OCR:

Omnicare, Inc. operates as a healthcare services company that specializes in the management of pharmaceutical care in the United States. The stock currently has a dividend yield of 0.9%. OCR has a PE ratio of 5. Currently there are 2 analysts that rate Omnicare a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Omnicare has been 2.7 million shares per day over the past 30 days. Omnicare has a market cap of $9.2 billion and is part of the health care sector and health services industry. The stock has a beta of 0.47 and a short float of 7.5% with 5.85 days to cover. Shares are up 29.8% year-to-date as of the close of trading on Monday.

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 Omnicare as a hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • OMNICARE INC has improved earnings per share by 27.1% 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. This trend suggests that the performance of the business is improving. During the past fiscal year, OMNICARE INC increased its bottom line by earning $1.73 versus $0.74 in the prior year. This year, the market expects an improvement in earnings ($4.16 versus $1.73).
  • 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 Health Care Providers & Services industry average. The net income increased by 21.3% when compared to the same quarter one year prior, going from $63.77 million to $77.39 million.
  • Powered by its strong earnings growth of 27.11% and other important driving factors, this stock has surged by 44.33% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Health Care Providers & Services industry and the overall market, OMNICARE INC's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for OMNICARE INC is rather low; currently it is at 22.42%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 4.66% is above that of the industry average.

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.

More from Markets

Podcast: What TheStreet's Interns Learned From Jim Cramer and Action Alerts PLUS

Podcast: What TheStreet's Interns Learned From Jim Cramer and Action Alerts PLUS

Bank of America, Tariffs and the Goldman Sachs CEO Change: Jim Cramer Rewind

Bank of America, Tariffs and the Goldman Sachs CEO Change: Jim Cramer Rewind

Here's Why Alphabet, Facebook and Amazon Earnings May Overshadow Tariff Worries

Here's Why Alphabet, Facebook and Amazon Earnings May Overshadow Tariff Worries

NYSE Trader Expects Blowout Earnings From Alphabet, Amazon and Facebook

NYSE Trader Expects Blowout Earnings From Alphabet, Amazon and Facebook

Don't Panic! The Risk of a Recession This Year Is Low

Don't Panic! The Risk of a Recession This Year Is Low