Today's Water-Logged And Getting Wetter Stock: OM Group (OMG)

Trade-Ideas LLC identified OM Group ( OMG) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) 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 $51.4 million.
  • OMG has traded 549,258 shares today.
  • OMG traded in a range 443.6% of the normal price range with a price range of $1.09.
  • OMG traded below its daily resistance level (quality: 146 days, meaning that the stock is crossing a resistance level set by the last 146 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' 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 negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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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%. Currently there are no analysts that rate OM Group a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for OM Group has been 548,400 shares per day over the past 30 days. OM Group has a market cap of $1.0 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 0.71 and a short float of 4.5% with 0.76 days to cover. Shares are up 11.4% year-to-date as of the close of trading on Thursday.

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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 solid stock price performance, increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and poor profit margins.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 68.75% and other important driving factors, this stock has surged by 48.38% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although OMG had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 67.3% when compared to the same quarter one year prior, rising from $4.90 million to $8.20 million.
  • OM GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, OM GROUP INC reported poor results of -$5.72 versus -$2.23 in the prior year. This year, the market expects an improvement in earnings ($0.80 versus -$5.72).
  • Net operating cash flow has decreased to $15.90 million or 33.19% 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.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Chemicals industry and the overall market, OM GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.

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