Analysts use the put/call ratio as an indicator of the sentiment surrounding a stock – when a stock’s put/call ratio drops, fewer options traders are bearish on that stock, and vice-versa.
We ran a screen on large-cap stocks that have seen drops in their put/call ratios over the last 10 trading days (a bullish trend). We screened these stocks for those that appear highly undervalued, with PEG below 1 and P/FCF below 10.
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.
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Do you think the market is undervaluing these stocks? Use this list as a starting point for your own analysis.
List sorted by decrease in put/call ratio.
1. HCA Inc. (NYSE:HCA): Hospitals Industry. Market cap of $10.36B. PEG at 0.76, P/FCF at 5.57. Put/call ratio has decreased 28.36% over the last 10 trading days (from 0.67 to 0.48). The stock is currently stuck in a downtrend, trading 11.52% below its SMA20, 32.53% below its SMA50, and 38.71% below its SMA200. The stock has performed poorly over the last month, losing 28.53%.
2. CBS Corporation (NYSE:CBS): Broadcasting Industry. Market cap of $15.55B. PEG at 0.76, P/FCF at 9.38. Put/call ratio has decreased 22.43% over the last 10 trading days (from 1.07 to 0.83). This is a risky stock that is significantly more volatile than the overall market (beta = 2.15). It's been a rough couple of days for the stock, losing 6.86% over the last week.
3. The Bank of New York Mellon Corporation (NYSE:BK): Asset Management Industry. Market cap of $25.09B. PEG at 0.77, P/FCF at 6.0. Put/call ratio has decreased 8.85% over the last 10 trading days (from 1.13 to 1.03). The stock has performed poorly over the last month, losing 20.45%.
4. Gilead Sciences Inc. (NASDAQ:GILD): Biotechnology Industry. Market cap of $29.43B. PEG at 0.73, P/FCF at 9.34. Put/call ratio has decreased 5.71% over the last 10 trading days (from 0.70 to 0.66). The stock has gained 16.24% over the last year.
5. Sun Life Financial Inc. (NYSE:SLF): Life Insurance Industry. Market cap of $15.05B. PEG at 0.89, P/FCF at 3.23. Put/call ratio has decreased 2.70% over the last 10 trading days (from 0.74 to 0.72). The stock has gained 19.66% 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.