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 on Oct. 27 caught my eye below. Again, unusual option activity always catches my attention since options are generally a strong indicator to future movement as they provide great leverage for an investor.
Bank of Montreal (BMO), together with its subsidiaries, provides a range of retail banking, wealth management, and investment banking products and solutions in North America and internationally. There was particularly aggressive buying the Mar 65 calls with well over 20,000 contracts changing hands indicating strong bullishness. The stock moved up nicely with the general market surge today, but still looks cheap at trailing 12x P/E, forward 11x P/E, 1.1x PEG, respectable ROA and ROE of .73% and 13.19% respectively, along with a great 4.7% dividend yield. I think this is quality holding here.
Barrick Gold (ABX) engages in the production and sale of gold, as well as related activities, such as exploration and mine development. There was strong volume at various strike prices with particularly the Nov 49 calls being bought aggressively with over 11,500 contracts changing hands. This indicates strong bullishness and the stock looks reasonably cheap at trailing 13x P/E and forward 8x P/E along with a .35x PEG. Moreover, gold has moved up nicely above $1700 again which bodes well for ABX's existing gold reserves. I think this is a great commodities buy.
Hecla Mining (HCL), together with its subsidiaries, engages in the discovery, acquisition, development, production, and marketing of silver, gold, lead, and zinc. There was aggressive call buying with the Dec 6 calls showing strong volume particularly with close to 25,000 contracts changing hands. The stock has some decent valuations with a trailing 22.5x P/E and forward 9x P/E, .7x PEG, and virtually no debt with approximately $1.3/share in net cash. I like the clean balance sheet free of any goodwill or intangible assets, great net cash position, I think this, much like ABX, is a great precious metals stock.
Vale S.A. (VALE) engages in the exploration, production, and sale of basic metals in Brazil. The company also involves in fertilizers, logistics, and steel businesses. This company had favorable options activity on Oct. 26 as I mentioned here. It looks like it will continue as investors were aggressively selling puts as well as aggressively buying particularly Nov 26 and 27 calls. I still think the stock looks cheap with a P/E under 6x, .7x PEG, over $7B in FCF this past year,and a very nice dividend yield of 7% as the past four dividends totaled $1.73/share.
CVS Caremark (CVS) operates as a pharmacy services company in the United States. There was particularly strong call buying the Nov 38 and 39 and strong Jan 30 put selling indicating bullishness. This retailing giant looks attractive at a trailing 15x P/E, forward 12x P/E, .5x P/S, .6x EV/S, and growing 1.4% dividend yield. This stock is a good buy.
Focus Media Holding Limited (FMCN), a multi-platform digital media company, operates liquid crystal display (LCD) network using audiovisual digital displays in China. I recommended this stock earlier in the month here and even ahead of my expectations it has moved up approximately 60% since that time. However, the options activity was very bullish as it looks as though investors were rolling over their profitable Apr 20 calls into Apr 30 calls. This indicates that they see significant more upside. The stock has shot-up since I liked it near $16, however still trades at a reasonable trailing 17x P/E, forward 13x P/E, .5x PEG, and pristine balance sheet with no debt and nearly $4.5/share in cash. I'd continue holding.
Western Refining (WNR), through its subsidiaries, operates as an independent crude oil refiner and marketer of refined products. There was aggressive buying with the Dec 15 and Mar 15 calls as they both traded approximately 5,000 contracts. This could be a calendar spread or simply two different investors buying calls, but either way is bullish and the valuations look compelling at a trailing 14x P/E, forward 5x P/E, .1x PEG, and .3x EV/S. Moreover, I indicated even though there was recently some insider selling here, there is still very strong insider ownership of approximately 45%. This options activity leads me to be even more bullish. I'd still hold WNR.