There are many indicators I use when analyzing a stock. One indicator I look for are relatively cheap dividend stocks. Another strong indicator is insider activity in stocks, such as the ones described here. Finally, another indicator is looking at unusual option activity, as I recently brought up here, while some recently caught my eye:
Cloud Peak Energy (CLD), through its subsidiaries, engages in coal mining operations in the Powder River Basin of the United States. Nov 20 call and put volume exploded far above open interest with potentially strong movement coming on its Oct. 27 earnings announcement. Valuations look attractive at 10x P/E, .4x PEG, and .9x P/S. I think this makes for a nice energy play.
Toll Brothers (TOL) engages in designing, building, marketing, and arranging finance for single-family detached and attached homes in luxury residential communities in the United States. Nov 14 calls had very strong volume of 15,000 contracts, along with Dec 18 calls shooting up in value with well over 11,000 contracts. This seems to be strong optimism in the stock, potentially ahead of its Dec. 6 earnings announcement, but I'm still relatively bearish on residential housing. Moreover, the stock trades a steep trailing P/E of 40 and forward P/E of 58, 678x EV/EBITDA, and burned through approximately $150M in cash this past year. I'd stay away from TOL for now.
Chico's FAS (CHS), together with its subsidiaries, operates as a specialty retailer of casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing gift items. Nov 14 calls specifically had very strong volume, indicating bullishness most likely regarding the rumors that Pershing Square is looking to unlock value in CHS. The company trades at a trailing 15x P/E and forward 11x P/E, while only .8x EV/S, no debt and close to $3/share in net cash, and decent 1.6% dividend yield. I think CHS is a good buy on this bullishness.
Powerwave Technologies (PWAV) engages in the design, manufacture, marketing, and sale of wireless solutions for wireless communications networks worldwide. The company recently got slammed on a horrible Q4 forecast and the bearishness looked still intact as there was heavy volume specifically in the Nov 2.5 and 5 puts. The company has a trailing 7.8x P/E, but analyst are expecting a loss in the upcoming year, the company still has a sizable debt load and negative $150M cash position, and is trading at a relatively pricey 1.9x P/B. Moreover, the stock shedding another 8.5% as the stock market surged today is technically very negative. I'd follow the put activity and stay away from PWAV.
Nuance Communications (NUAN) provides voice and language solutions for businesses and consumers worldwide. The Jan 25 calls specifically had enormous volume nearing 13,000 contracts indicating bullishness. Trailing 178x P/E is misleading as the forward 16x P/E is much more reasonable along with a strong $275M in free cash flow this past year. However, the stock still trades at 3x P/B, 6x EV/S, and 29x EV/EBITDA. The stock has been performing well now sitting right near all-time highs, but this is definitely for the aggressive growth investor at these elevated levels.
Carnival Corporation (CCL) operates as a cruise and vacation company. Nov 35 calls surged specifically indicating bullishness. The stock looks appealing at 14x P/E, 1.1x P/B, and very respectable 3% dividend yield that is only at a 44% payout ratio indicating that it is very secure. This is a nice dividend holding.
Teradyne (TER), together with its subsidiaries, provides automatic test equipment products and services worldwide. The Nov 12 calls specifically had very strong volume, actually closing lower even as the stock moved up 1.5%, indicating bearishness most likely ahead of its Oct. 26 earnings announcement. This stock is heavily shorted. I described my thoughts about TER here recently.