Options Watch: 10 Undervalued Stocks With Bullish Options Momentum

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 |  Includes: AAL, ENIA, JKS, JRCCQ, MGA, NAFC, NPO, OMN, QRVO, XEC
by: Kapitall

If you believe that the options markets tend to predict movements in the spot market, then this may be an interesting starting point for our own analysis.

To construct this list we started with a list of over 100 stocks that are trading at a significant discount to their target price established by analysts (used as a proxy for fair value).

We then sorted through outstanding put and call contracts for each of these names, and focused on those stocks that had experienced a significant increase in the outstanding call contracts over the last two weeks.

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It seems as if options traders think these names are ready to rally--do you?

1. Nash Finch Co. (NASDAQ:NAFC): Food Wholesale Industry. Market cap of $437.90M. This stock is trading at a discount of 23.34%, when comparing its current price of $36.03 vs. analysts' estimates of $47.0. The Put/Call ratio dropped by 72.87%, from 1.29 to 0.35. The stock is a short squeeze candidate, with a short float at 6.68% (equivalent to 13.79 days of average volume).

2. Magna International, Inc. (NYSE:MGA): Auto Parts Industry. Market cap of $12.65B. This stock is trading at a discount of 19.7%, when comparing its current price of $51.97 vs. analysts' estimates of $64.72. The Put/Call ratio dropped by 41.36%, from 1.62 to 0.95. Might be undervalued at current levels, with a PEG ratio at 0.89, and P/FCF ratio at 12.8. The stock has gained 47.67% over the last year.

3. Cimarex Energy Co. (NYSE:XEC): Independent Oil & Gas Industry. Market cap of $8.26B. This stock is trading at a discount of 24.41%, when comparing its current price of $93.31 vs. analysts' estimates of $123.44. The Put/Call ratio dropped by 40.23%, from 0.87 to 0.52. It's been a rough couple of days for the stock, losing 7.96% over the last week.

4. JinkoSolar Holding Co., Ltd. (NYSE:JKS): Industrial Electrical Equipment Industry. Market cap of $646.31M. This stock is trading at a discount of 23.65%, when comparing its current price of $27.25 vs. analysts' estimates of $35.69. The Put/Call ratio dropped by 34.29%, from 1.05 to 0.69. The stock has gained 0.% over the last year.

5. James River Coal Co. (JRCC): Industrial Metals & Minerals Industry. Market cap of $756.77M. This stock is trading at a discount of 27.56%, when comparing its current price of $20.95 vs. analysts' estimates of $28.92. The Put/Call ratio dropped by 34.26%, from 1.08 to 0.71. Might be undervalued at current levels, with a PEG ratio at 0.78, and P/FCF ratio at 10.28.

6. RF Micro Devices Inc. (RFMD): Semiconductor Industry. Market cap of $1.68B. This stock is trading at a discount of 26.04%, when comparing its current price of $6.05 vs. analysts' estimates of $8.18. The Put/Call ratio dropped by 27.27%, from 0.66 to 0.48. This is a risky stock that is significantly more volatile than the overall market (beta = 2.47). The stock has gained 17.53% over the last year.

7. OMNOVA Solutions Inc. (NYSE:OMN): Specialty Chemicals Industry. Market cap of $416.66M. This stock is trading at a discount of 23.23%, when comparing its current price of $9.02 vs. analysts' estimates of $11.75. The Put/Call ratio dropped by 26.32%, from 0.19 to 0.14. This is a risky stock that is significantly more volatile than the overall market (beta = 2.1). Exhibiting strong upside momentum--currently trading 6.51% above its SMA20, 15.46% above its SMA50, and 16.94% above its SMA200.

8. Enersis S.A. (ENI): Foreign Utilities Industry. Market cap of $13.97B. This stock is trading at a discount of 29.28%, when comparing its current price of $21.23 vs. analysts' estimates of $30.02. The Put/Call ratio dropped by 25.29%, from 0.87 to 0.65. The stock has gained 14.56% over the last year.

9. EnPro Industries, Inc. (NYSE:NPO): Industrial Equipment & Components Industry. Market cap of $908.86M. This stock is trading at a discount of 19.04%, when comparing its current price of $43.92 vs. analysts' estimates of $54.25. The Put/Call ratio dropped by 25.0%, from 0.04 to 0.03. The stock is a short squeeze candidate, with a short float at 7.46% (equivalent to 6.7 days of average volume).

10. US Airways Group, Inc. (LCC): Major Airlines Industry. Market cap of $1.54B. This stock is trading at a discount of 22.6%, when comparing its current price of $9.76 vs. analysts' estimates of $12.61. The Put/Call ratio dropped by 21.62%, from 0.37 to 0.29. The stock has had a good month, gaining 19.65%.

*Options data sourced from Schaeffer’s, other relevant data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.