Five Stocks Contrarian Traders Love

11/26/2010 12:01 am EST

Focus: STOCKS

The following is a list of stocks that have recently been downgraded by Wall Street analysts. In addition, all of these stocks have a large put option open interest relative to call option open interest (i.e. bearish options market sentiment).

If you're a contrarian, this excessive pessimism might raise a flag and indicate a trend reversal is near. Use this list as a starting point for your own analysis.

Options data was sourced from Schaeffer's, analyst downgrades were sourced from RTT News.

The list has been sorted using the put/call ratio.

1. Ladish Co. Inc. (LDSH): Metal fabrication industry. Market cap of $717.65 million. FBR Capital Markets downgraded the stock from “Outperform” to “Market Perform” on Nov. 18. Call open interest at 488 contracts versus put open interest at 2,168 contracts (put/call ratio at 4.44). Short float at 4.22%, which implies a short ratio of 3.1 days. The stock has gained 239.09% over the last year.

2. PartnerRe Ltd. (PRE): Property and casualty insurance industry. Market cap of $5.81 billion. Deutsche Bank downgraded the stock from “Buy” to “Hold” on Nov. 5. Call open interest at 650 contracts versus put open interest at 1,934 contracts (put/call ratio at 2.98). Short float at 2.85%, which implies a short ratio of 5.86 days. The stock has gained 3.32% over the last year.

3. Bucyrus International Inc. (BUCY): Farming and construction machinery industry. Market cap of $7.22 billion. KeyBanc Capital Markets downgraded the stock from “Buy” to “Hold” on Nov. 16. Call open interest at 54,997 contracts versus put open interest at 88,117 contracts (put/call ratio at 1.6). Short float at 5.57%, which implies a short ratio of 1.57 days. The stock has gained 66.02% over the last year.

4. Gildan Activewear Inc. (GIL): Textiles industry. Market cap of $3.34 billion. FBR Capital Markets downgraded the stock from “Market Perform” to “Underperform” on Nov. 12. Call open interest at 3,267 contracts versus put open interest at 5,112 contracts (put/call ratio at 1.56). Short float at 3.81%, which implies a short ratio of 9.7 days. The stock has gained 48.76% over the last year.

5. Taleo Corp. (TLEO): Application software industry. Market cap of $1.25 billion. Credit Suisse downgraded the stock from “Outperform” to “Neutral” on Nov. 9. Call open interest at 247 contracts versus put open interest at 351 contracts (put/call ratio at 1.42). Short float at 4.67%, which implies a short ratio of 5.53 days. The stock has gained 39.63% over the last year.

By Luis Gonzalez of Kapitall.com

Related Articles on STOCKS