ATR Oversold/Overbought Signals to Track- BIOLASE, Inc. (NASDAQ:BIOL)

On Thursday,  shares of BIOLASE, Inc. (NASDAQ:BIOL) reached at $1.24 price level during last trade its distance from 20 days simple moving average was 62.23%, and its distance from 50 days simple moving average was 156.05% while it has a distance of 198.92% from the 200 days simple moving average. The big shareholder groups in BIOLASE, Inc. (NASDAQ:BIOL) have power over the company. Institutions often own shares in more established companies, while it’s not unusual to see insiders own a fair bit of smaller companies. Companies that have been privatized tend to have low insider ownership.

BIOLASE is a smaller company with a market capitalization of US$188m, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutional investors have bought into the company. Let’s take a closer look to see what the different types of shareholders can tell us about BIOLASE.

What Does The Institutional Ownership Tell Us About BIOLASE?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

BIOLASE already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can’t rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It’s therefore worth looking at BIOLASE’s earnings history below. Of course, the future is what really matters.

Our data indicates that hedge funds own 4.8% of BIOLASE. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. The company’s largest shareholder is Armistice Capital LLC, with ownership of 6.5%. Schuler Family Foundation, Endowment Arm is the second largest shareholder owning 5.6% of common stock, and Oracle Investment Management, Inc. holds about 1.9% of the company stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company’s shares, meaning that the company’s shares are widely disseminated and there is no dominant shareholder.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of BIOLASE

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own some shares in BIOLASE, Inc.. As individuals, the insiders collectively own US$4.0m worth of the US$188m company. It is good to see some investment by insiders, but I usually like to see higher insider holdings.

General Public Ownership

The general public, mostly retail investors, hold a substantial 59% stake in BIOLASE, suggesting it is a fairly popular stock. This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Past 5 years growth of BIOL observed at 19.20%, and for the next five years the analysts that follow this company are expecting its growth at 20.00%. The average true range (ATR) is a measure of volatility introduced by Welles Wilder in his book, “New Concepts in Technical Trading Systems.” The true range indicator is the greatest of the following: current high less the current low, the absolute value of the current high less the previous close and the absolute value of the current low less the previous close. The average true range is a moving average, generally 14 days, of the true ranges.

Liquidity:

The stock has a market cap of $121.50M with 93.51M shares outstanding, of which the float was 84.36M shares. Analysts consider this stock active, since it switched Trading volume reached 68,044,656 shares as compared to its average volume of 29.40M shares. The Average Daily Trading Volume (ADTV) demonstrates trading activity related to the liquidity of the security. When Ave Volume tends to increase, it shows enhanced liquidity.

But when Ave Volume is lower, the security will tend to be cheap as people are not as keen to purchase it. Hence, it might have an effect on the worth of the security. BIOL’s relative volume was 2.37. Relative volume is a great indicator to keep a close eye on, but like most indicators it works best in conjunction with other indicators and on different time frames. Higher relative volume you will have more liquidity in the stock which will tighten spreads and allow you to trade with more size without a ton of slippage.

Important Technical Indicators Analysis Report and Volatility Measures:

Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which calculates the predictable return of an asset based on its beta and predictable market returns. Beta is also known as the beta coefficient.

A beta of 1 indicates that the security’s price moves with the market. A beta of less than 1 means that the security is theoretically less volatile than the market. A beta of greater than 1 indicates that the security’s price is theoretically more volatile than the market. After a recent check, beta value for this stock comes out to be 2.32. A statistical measure of the dispersion of returns (volatility) for BIOL producing salvation in Investors mouth, it has week volatility of 21.95% and for the month booked as 22.99%. Regardless of which metric you utilize, a firm understanding of the concept of volatility and how it is measured is essential to successful investing. A stock that maintains a relatively stable price has low volatility. When investing in a volatile security, the risk of success is increased just as much as the risk of failure.

The volatility value is used by the investors for various reasons and purposes in measuring the fundamental price change and the rate of variation in BIOL’s price. The ART is a specific type of indicator, which is capable of weighing up stock volatility in the financial markets effectively.

BIOLASE, Inc. has an average true range (ATR) of 0.18. Other technical indicators are worth considering in assessing the prospects for EQT. BIOL’s price to sales ratio for trailing twelve months was 4.98 and price to book ratio for most recent quarter was 7.29, whereas price to cash per share for the most recent quarter was 6.46. The Company’s price to free cash flow for trailing twelve months was 0. Its quick ratio for most recent quarter was 1.10. Analysts mean recommendation for the stock was 1.70. This number is based on a 1 to 5 scale where 1 indicates a Strong Buy recommendation while 5 represents a Strong Sell.

Should You Go With High Insider Ownership?

Many value investors look for stocks with a high percent of insider ownership, under the theory that when management are shareholders, they will act in its own self interest, and create shareholder value in the long-term. This aligns the interests of shareholders with management, thus benefiting everyone. While this sounds great in theory, high insider ownership can actually lead to the opposite result, a management team that is unaccountable because they can keep their jobs under almost any circumstance.

BIOLASE, Inc.‘s shares owned by insiders remained 11.08%, whereas shares owned by institutional owners are 12.10%.

Where Do Relative Strength Index (RSI) Stands?

Perhaps, it is one of the most important indicators, because it is used in the technical analysis of the stock in the money market. The relative strength index (RSI) is claimed to depict the latest and past performances of the stock market, based upon the ending price volumes of the current trading period. The RSI is characterized as a momentum oscillator, evaluating the speed and scale of directional price shifts. The momentum exemplifies both rising and falling rates of the Price in the stock market. Using RSI, you can calculate momentum as the percentage of elevated closes to reduced closes. But if the stocks have experienced optimistic changes rapidly, then it might have an increased RSI than stocks. So, it might cause negative changes in the market.

The RSI index is largely used by traders on a 14-day time period and is evaluated on a range from 0 to 100, along with both high and low volumes marked at 70 and 30, correspondingly. Both the shorter and longer timeframes are used by the traders for shorter and longer purposes. It further adds high and low ranges like from 80 to 20 and from 90 to 10. This trend takes place less repeatedly.

However, it represents stronger momentum in the market. In the meantime, the Accenture plc’s 14-day RSI was settled at 67.01. All in all, the trends of the stock market were shifting slowly but surely.

Meanwhile, BIOL traded under umbrella of Healthcare sector, the stock was traded -17.88% ahead of its 52-week high and 487.68% beyond its 52-week low. So, both the price and 52-week high indicators would give you a clear-cut picture to evaluate the price direction.

Eden Shearer

About Eden Shearer

I am Eden Shearer and I focus on breaking news stories and ensuring we “Stocks Equity” offer timely reporting on some of the most recent stories released through market wires about “Healthcare” sector companies. I have formerly spent over 5 years as a trader in U.S. Stock Market and is now semi-stepped down. I work on a full time basis for stocksequity.com specializing in quicker moving active shares with a short term view on investment opportunities and trends. In my free time I enjoy participating in half marathons and triathlons, but I have sworn of full marathons.

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