During his first Executive Decision segment of Mad Money Tuesday, host Jim Cramer spoke with Ed Pesicka, president and CEO of Owens & Minor (OMI) , a provider of medical protective equipment and other medical and surgical supplies.
Pesicka said Owens & Minor continues to focus on America's shortage of personal protective equipment (PPE) and other healthcare supplies. He said its team initially worked hard to increase the output of existing product lines for items such as N95 surgical masks. Over time, Owens & Minor was able to add up to 50% more output from existing equipment.
We last looked at Owens & Minor back on March 30 and said at that time it was an "avoid." Let's check and see how things have changed especially since the middle of July.
In this daily bar chart of OMI, below, we can see that prices largely traded sideways in the $8 area from the end of March. Trading volume was very light and the On-Balance-Volume (OBV) line was flat and not showing any aggressive buying. Then in the middle of July we can see a big upside price gap and heavy trading volume. OMI rallied to around $17 before correcting back to around $13. The OBV line has been steady the past three weeks, suggesting that previous longs have decided to hold their positions. The Moving Average Convergence Divergence (MACD) oscillator quietly moved above the zero line back in April but really moved up strongly in July. This month we can see this indicator has crossed to the downside for a take profits sell signal.
In this weekly bar chart of OMI, below, we can see that prices have broken out from a base pattern going back to late 2018. Prices are above the rising 40-week moving average line and the MACD oscillator is very bullish on this time frame. The weekly OBV line has soared to a new high and tells us that buying of OMI has been very aggressive in this time frame.
In this daily Point and Figure chart of OMI, below, we can see that prices reached their upside price target of $17.
In this weekly close-only Point and Figure chart of OMI, below, we can see that the software is projecting a potential longer-term price target in the $38 area.
Bottom line strategy: I find it both interesting and frustrating that a stock can go from "avoid" to "how did I miss that upside breakout" in the blink of an eye. With a longer-term target of $38 I want to buy OMI, but it needs to consolidate the gains from July and build an upper-level base. Slowly buy available weakness and risk a close below $11 for now.