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Trade of the Day: Omega Healthcare Investors (OHI)

This REIT is pushing against the grain and should come out on top


The market has been volatile recently, to say the least. However, certain stocks seem to be staying above the fray and are actually performing pretty well under the circumstances. My pick for the Trade of the Day is Omega Healthcare Investors (OHI), a stock that is proving to be a strong buy. This healthcare real estate investment trust (REIT) focuses on ownership of long-term healthcare facilities.

This stock has been in a “buy signal” condition for a little over two months and has moved into a trend pattern that I like, in which the week-over-week pricing trend is moving from lower left to upper right and is virtually parallel to the upward trending 10-week, time-shifted, moving average for the Healthcare Sector ETF.

Bucking the Trend

Both the Industry (REIT – Healthcare Facilities) and the Healthcare Sector are in Bull Mode. However, it should be noted that the average price for every stock in the Healthcare Sector has moved below the Sector’s 10-week moving average trend-line. This means that OHI is bucking the trend of the Healthcare Sector.

A Healthcare Sector headwind could certainly be a negative for the stock, but in this case, it could prove to be a significant positive. If the Healthcare Sector were to reverse trend and with OHI already trending strongly higher, a Healthcare Sector reversal (which could certainly happen in this market) could bode extremely well for this stock.

I like the fact that there was some decent insider buying right about the time the stock hit an interim low, about three months ago. This could indicate that the insiders believe the stock’s price was cheap compared to what the price will be in the future — and the last few weeks tend to validate that thinking.

The week-over-week trading volume has been nicely trending higher since the beginning of the year. This increasing volume on increasing share price is a reasonably bullish indicator. OHI has also outperformed the S&P so far in 2014.

Strong Fundamentals and Technicals

If you take a look at the Turner Analytics charts below, both of the fundamentals that I track for this stock are scored as a “Strong Buy”. The technicals have a score of 82 out of 100 in the Turner Analytics analysis profile as well, which is very strong.

I am also impressed with the fact that the time-cycle forecast for OHI (another Turner Analytics tool component) is very bullish for the next 90 days.

I like the fact that the Expected Move (one standard deviation of normal volatility) of this stock is only $1.55, or 4.5%. This means it tends to stay on trend fairly consistently, and my stop on the stock does not incur a lot of downside risk.

And, lastly, it doesn’t hurt that OHI pays a dividend of over 5.5% and is due to go ex-dividend at the end of April.

Ticker: Omega Healthcare Investors (OHI)
Entry Price: $35.00
Stop: $31.75



About Omega Healthcare Investors (OHI) – Omega Healthcare Investors 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 was founded in 1992 and is based in Maryland, United States.

Mike Turner is an engineer turned entrepreneur with more than 20 years’ experience in systems development and enterprise-level software applications and 15+ years in finance and stock market strategies. He is the founder of Signal Investor and Turner Analytics.

Mike’s background in finance, computer science and engineering provide a solid foundation for Signal Investor’s rule based trading approach. Turner Analytics provide members with access to the software Mike created and uses to make his stock, option and trading recommendations. Click here to get Mike’s unique take on stocks through technical and fundamental analysis.

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