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 on Oct. 24:
Intel (INTC) engages in the design, manufacture, and sale of integrated circuits for computing and communications industries worldwide. Call option volume was strong, especially the Dec and Jan 25 with over 25,000 and 19,000 contracts traded, respectively. This looked to be aggressive call buying showing bullishness and I mentioned here recently how INTC is attractively priced at 10.5x P/E, just over 5x EV/EBITDA, .9x PEG, and very nice 3.5% dividend yield. The company just reported another great quarter and I'd still be a buyer even as its near a 52-week high.
Vale S.A. (VALE) engages in the exploration, production, and sale of basic metals in Brazil. The company had unusual option activity with a bullish 6,060 Mar 30 calls being bought aggressively, while over 7,000 Jan 2013 20 puts were sold aggressively. This stock looks cheap at 5.5x P/E, .7 PEG, over $7B in FCF this past year, 1.6x P/B, and a very nice dividend yield of 7% as the past four dividends totalled $1.73/share. This is a buy at these levels.
Ford Motor Company (F) primarily develops, manufactures, distributes, and services vehicles and parts worldwide. There was strong bullishness as investors bought over 27,000 Oct 13 calls that expire in three days and bought close to 14,000 Nov 13 calls. The stock looks cheap at 7.2x P/E, .85x PEG, .4x P/S, and .9x EV/S.
The Walt Disney Company (DIS), together with its subsidiaries, operates as an entertainment company worldwide. Some investors looked for some downside protection as the Apr 25 puts had an abnormal 5,149 contracts traded. The puts weren't bought aggressively, so I don't see this as bearish, and with DIS trading at just 15x P/E, .9x PEG, and a reasonable 1.9x EV/S, this is still a quality holding.
The PowerShares QQQ Trust (QQQ) is a unit investment trust designed to correspond generally to the performance, before fees and expenses, of the Nasdaq-100 index. An abnormally large 6,299 Dec 50 puts were traded, but seemed to be just downside protection rather than strong bearishness as they were bought aggressively. This makes for a nice holding of the NASDAQ and great diversification holding.
Microsoft (MSFT) develops, licenses, and supports a range of software products and services for various computing devices worldwide. Nov 26 and 27 put buying was stronger than usual as it traded over 12,000 and 11,000 contracts in each, respectively. Looks to be simple downside protection as they weren't bought aggressively and MSFT has moved up nicely recently. I still think it's a good buy trading under 10x P/E, 1x PEG, over $42B in net cash, close to $25B in FCF this past year, and very nice 2.9% dividend yield.
Cisco Systems (CSCO) designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information technology industry worldwide. Oct 17 puts expiring in three days had large volume with over 5,500 traded, but fell close to 60% just signaling investors either buying downside protection or closing out this position. Moreover, the stock trades at a trailing 15x P/E and low 9x P/E, 1.5x EV/S, close to $30B in net cash, and decent 1.4% dividend yield. This is still a good holding.