One way to check the market’s sentiment for a stock is by looking at the stock’s put/call ratio, or the ratio of put options relative to call options. Because a put option is a bet that a stock’s price will fall (and a call option is the opposite bet), increases in the put/call ratio are bearish, while decreases are bullish.
We searched a universe of potentially undervalued stocks, those trading under $5 with a PEG under 1. From this list, we screened for those that have seen significant decreases in their put/call ratio over the last two weeks, indicating a bullish shift in market sentiment.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
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 index over the last month. To access a complete analysis of this list's recent performance, click here.
List sorted by decrease in put/call ratio.
1. Mitel Networks Corp. (MITL): Communication Equipment Industry. Market cap of $216.44M. Price at $4.03. PEG at 0.19. Put/call ratio has decreased 46.67% over the last 10 trading days (from 0.15 to 0.08). The stock is currently stuck in a downtrend, trading 7.72% below its SMA20, 16.26% below its SMA50, and 26.8% below its SMA200. The stock has performed poorly over the last month, losing 14.68%.
2. Xinyuan Real Estate Co., Ltd. (XIN): Residential Construction Industry. Market cap of $159.18M. Price at $2.04. PEG at 0.21. Put/call ratio has decreased 13.70% over the last 10 trading days (from 1.46 to 1.26). It's been a rough couple of days for the stock, losing 6.33% over the last week.
3. ReneSola Ltd. (SOL): Semiconductor Industry. Market cap of $417.75M. Price at $4.56. PEG at 0.12. Put/call ratio has decreased 9.68% over the last 10 trading days (from 0.62 to 0.56). This is a risky stock that is significantly more volatile than the overall market (beta = 2.94). The stock is currently stuck in a downtrend, trading 7.73% below its SMA20, 27.63% below its SMA50, and 51.14% below its SMA200. The stock has lost 35.26% over the last year.
4. Origin Agritech Limited (SEED): Farm Products Industry. Market cap of $107.77M. Price at $4.40. PEG at 0.72. Put/call ratio has decreased 2.74% over the last 10 trading days (from 0.73 to 0.71). This is a risky stock that is significantly more volatile than the overall market (beta = 2.36). The stock has lost 43.66% over the last year.
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.