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Three Underloved Equities Making All-Time Highs

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Don't expect to see Wall Street's favorite names on the list. These equities are underloved from a sentiment perspective.

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This week I'll discuss a few equities that notched all-time highs recently. You won't find me talking up Wall Street's favorite names though. I am going to focus on three equities that are underloved from a sentiment perspective.

For starters, lofty levels of short interest on outperforming stocks allow the possibility for a short-covering rally. Moreover, high levels of pessimism from the brokerage bunch leaves the door wide open for a round of upgrades and/or price-target hikes. Additionally, heavy accumulations of near-term put open interest could give these equities a lift, as the bearish bets unwind.

Tesla Motors

Tesla Motors, Inc. (NASDAQ:TSLA) is an electric vehicles and components manufacturer.
  • At TSLA's average daily volume, it would take 20 days of trading to buy back all of these bearish wagers.
  • Short interest has risen 24% in the past three months.
  • Put implied volatilities relative to calls are at an extreme, reflecting increased demand to hedge shares.


Colgate-Palmolive

Colgate-Palmolive (NYSE:CL) is a consumer products company
  • Per Zacks', 17 of the 21 analysts who rate CL rate it a Hold or Sell (all-time highs, though…).
  • In the April/May/June series of options, there are four puts per every one call, a multi-year extreme.
  • Put implied volatilities relative to calls are at an extreme, reflecting increased demand to hedge shares.
  • Short interest is up 43% in the past quarter.


Nike

Nike (NYSE:NKE) is engaged in the design, development, and worldwide marketing and selling of footwear, apparel, equipment, accessories and services.
  • Eleven of the 17 analysts who cover NKE rate it a HOLD, the most bearish analyst configuration ever!
  • Despite this bearish analyst posture, analysts have unanimously raised their earnings estimates going forward.
  • There continues to be more puts open than calls in all option series.
  • Technical support from May 2012 highs are coming into play after recent gap.


These candidates have the necessary conditions for (continued) out-performance in the months ahead, based upon the premise that continued strength can cause negative sentiment to evolve into positive price action. I'd also feel more confident owning a name that others shun, especially with strong price action, in comparison to a name that everybody already loves.

This article by Chris Prybal was originally published on Schaeffer's Investment Research.

Below, find some more great content from Schaeffer's Investment Research:


Daily Game Plan – Broad-Based Selloff

Near-Term Call Volume Swells on United Continental Holdings Inc (UAL)

Sony Corporation (SNE) News Attracts New Option Sellers

Twitter: @schaeffers
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No positions in stocks mentioned.
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