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If you believe that the options market is a good predictor of the spot market, then this may be an interesting starting point for your own analysis.

To compile this list we looked for stocks trading with low price to earnings to growth ratio, i.e. PEG < 1. We then looked through their outstanding options contracts and kept those that had experienced a significant increase in outstanding call contracts over the last two weeks.



We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 (NYSEARCA:SPY) index over the last month. As the graph shows, the list has droped below market average over the last two weeks. To access a complete analysis of this list's recent performance, click here.



(Click chart to enlarge)

Given this data, which of these stocks do you find to be most attractive?

1. Brasil Foods S.A. (NYSE:BRFS):
Meat Products Industry. Market cap of $16.42B. PEG at 0.89. The Put/Call ratio decreased by 48.28%, from 0.29 to 0.15. Might be undervalued at current levels, with a PEG ratio at 0.89, and P/FCF ratio at 13.67. The stock has gained 46.17% over the last year.

2. AbitibiBowater Inc. Common Stoc (ABH): Paper & Paper Products Industry. Market cap of $2.51B. PEG at 0.19. The Put/Call ratio decreased by 31.19%, from 1.09 to 0.75. The stock has gained 0.% over the last year.

3. Novellus Systems, Inc. (NASDAQ:NVLS): Semiconductor Equipment & Materials Industry. Market cap of $3.33B. PEG at 0.84. The Put/Call ratio decreased by 30.16%, from 0.63 to 0.44. Might be undervalued at current levels, with a PEG ratio at 0.84, and P/FCF ratio at 9.89. The stock has had a couple of great days, gaining 5.28% over the last week.

4. James River Coal Co. (JRCC):
Industrial Metals & Minerals Industry. Market cap of $733.01M. PEG at 0.75. The Put/Call ratio decreased by 26.92%, from 1.04 to 0.76. Might be undervalued at current levels, with a PEG ratio at 0.75, and P/FCF ratio at 9.95. The stock has gained 13.55% over the last year.

5. Cimarex Energy Co. (NYSE:XEC):
Independent Oil & Gas Industry. Market cap of $7.78B. PEG at 0.55. The Put/Call ratio decreased by 26.76%, from 0.71 to 0.52. It's been a rough couple of days for the stock, losing 6.81% over the last week.

6. Aetna Inc. (NYSE:AET):
Health Care Plans Industry. Market cap of $16.25B. PEG at 0.82. The Put/Call ratio decreased by 23.91%, from 0.92 to 0.7. Exhibiting strong upside momentum--currently trading 8.3% above its SMA20, 14.3% above its SMA50, and 32.34% above its SMA200. The stock has had a good month, gaining 13.7%.

7. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD):
Heavy Construction Industry. Market cap of $384.88M. PEG at 0.34. The Put/Call ratio decreased by 23.08%, from 0.13 to 0.1. The stock is a short squeeze candidate, with a short float at 5.06% (equivalent to 5.66 days of average volume). The stock is currently stuck in a downtrend, trading -10.47% below its SMA20, -14.18% below its SMA50, and -8.15% below its SMA200.

*Options data sourced from Schaeffer's, all other 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.

Source: Rebound Ideas: 7 Undervalued Stocks With Bullish Options Momentum