Trade-Ideas LLC identified Ocean Rig UDW ( ORIG) as a weak 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 $5.7 million.
  • ORIG has traded 612,293 shares today.
  • ORIG is trading at 2.01 times the normal volume for the stock at this time of day.
  • ORIG is trading at a new low 8.10% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of 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 (or avoid losses by trimming weak positions). 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, provides oilfield services for offshore oil and gas exploration, development, and production drilling worldwide. It specializes in the ultra-deepwater and harsh-environment segment of the offshore drilling industry. ORIG has a PE ratio of 3. Currently there is 1 analyst that rates Ocean Rig UDW a buy, 3 analysts rate it a sell, and 1 rates it a hold.

The average volume for Ocean Rig UDW has been 2.3 million shares per day over the past 30 days. Ocean Rig UDW has a market cap of $251.0 million and is part of the basic materials sector and energy industry. The stock has a beta of 1.69 and a short float of 4.6% with 1.20 days to cover. Shares are up 36.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ocean Rig UDW as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow, generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 299.3% when compared to the same quarter one year ago, falling from $87.51 million to -$174.40 million.
  • Net operating cash flow has significantly decreased to $89.15 million or 60.07% 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 78.81%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 290.90% compared to the year-earlier 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 1.32 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.87, which shows the ability to cover short-term cash needs.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Energy Equipment & Services industry and the overall market on the basis of return on equity, OCEAN RIG UDW INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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