Hilary Kramer has 30 years of experience on Wall Street; she was an analyst and investment banker at...
A Fourth-Quarter Trio
10/14/2015 9:00 am EST
Which stocks should bulls be keeping an eye on this quarter? asks Karee Venema. The analyst with Schaeffer Investment Research highlights a trio of ideas that have historically performed well in the 4th quarter.
All three featured stocks below have turned in strong fourth-quarter performances during the past ten years.
Nike, the athletic apparel, has been positive in the fourth quarter nine of the past ten years, averaging a return of 5.1%.
The equity has continued this technical tenacity in 2015, tacking on 28%. In fact, the shares recently hit a record high.
Nevertheless, option traders have been initiating long puts over calls at a faster-than-usual clip in recent months, per NKE's put/call volume ratio of 1.06, in the 94th annual percentile.
While it's possible that some of this put buying may be of the protective kind, an unwinding of the bearish bets could help Nike, Inc. extend its trek into all-time-high territory.
Deere & Company (DE)
Factory equipment specialist Deere, meanwhile, had a rough start to the fourth quarter, tumbling to a three-year low.
The stock has come out swinging this week, and if past is precedent, this momentum could continue into year's end, as well.
Specifically, DE has been positive in nine of the past ten quarters, averaging a return of 11.7%.
DE could also get a boost should analysts change their tune. Currently, 14 out of 16 brokerages maintain a hold or worse recommendation, while the average 12-month price target of $80.61 is just a stone's throw away from current trading levels.
Another fourth-quarter breakout could prompt a round of upgrades and/or price-target hikes.
Priceline Group (PCLN)
After topping out at an all time high of $1,395 in early August, PCLN pulled back to—and bounced from—its 320-day moving average.
If history is any guide, more upside could be on the immediate horizon. Over the past ten years, PCLN has been positive in nine fourth quarters, averaging a gain of 13.5%.
On the sentiment front, speculative traders are more put-skewed than usual toward Priceline Group.
The equity's put/call open interest ratio of 1.01 ranks in the 75th percentile of its annual range, meaning short-term traders have shown a preference for puts over calls among options set to expire in three months or less.
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