Schaeffer's Trading Floor Blog

Stocks to Watch Tuesday: Oracle Corporation, Caterpillar Inc., and AK Steel Holding Corporation

Analyzing ORCL, CAT, and AKS ahead of tomorrow's trading

by 3/31/2014 4:49 PM
Stocks quoted in this article:

Momentum names that made notable moves on Monday and could continue to do so into Tuesday's session include software specialist Oracle Corporation (NYSE:ORCL), machinery manufacturer Caterpillar Inc. (NYSE:CAT), and steel producer AK Steel Holding Corporation (NYSE:AKS). Here is a quick look at these stocks ahead of tomorrow's opening bell.

Oracle Corporation (NYSE:ORCL)

Oracle gained 3.4% today to close at $40.91, after earlier bouncing to a 13-plus-year high of $41.43. Today's win marked the stock's sixth consecutive day in the green, with the shares now up 9.1% from their March 21 closing price of $37.50. Meanwhile, ORCL's overall options volume spiked to three times the expected daily amount, with the April 41 call receiving the most attention. Today's preference for calls over puts, particularly among options expiring within the next three months, is just more of the same for Oracle, which sports a Schaeffer's put/call open interest ratio (SOIR) of 0.62. This ratio ranks just 2 percentage points from a 12-month low, indicating short-term speculators have rarely been more call-heavy toward ORCL than they are now.

Caterpillar Inc. (NYSE:CAT)

Caterpillar surged into triple-digit territory today for the first time since May 2012, peaking at $100.63 before closing the session at $99.37. Bolstering the stock was a price-target boost to $112 from $107 at Barclays around midday. While CAT's SOIR of 1.94 ranks higher than all comparable readings from the past year -- indicating an annual-high level of put open interest, relative to call open interest, among short-term options -- today's speculators were relatively call-biased toward the stock. Garnering notable attention was the equity's weekly 4/4 102-strike call, where the majority of contracts were likely bought to open, as speculators bet on CAT reaching higher highs through week's end. It is also possible that some of the day's call activity came at the hands of short sellers hedging against additional upside, considering the current amount of short interest on CAT represents more than six sessions' worth of pent-up buying demand, at the shares' average daily volume. Tomorrow, Caterpillar is slated to appear before Congress to defend its offshore tax strategies.

AK Steel Holding Corporation (NYSE:AKS)

AK Steel finished today's session 4.6% higher at $7.22, notching an 16.3% gain for the month of March. A Morgan Stanley analyst today opined that an accident at United States Steel Corporation's (NYSE:X) plant on Thursday could translate into a boon for AKS. Despite the shares' technical success, short interest climbed 7% during the most recent reporting period, and now makes up 28% of AKS' available float. Furthermore, 12 of the 13 covering analysts maintain "hold" or worse suggestions on the stock, while the average 12-month price target of $6.38 denotes an 11.6% discount to the shares' current price. All in all, AK Steel could end up benefiting from additional technical tailwinds, should a short-covering scenario play out, and/or analysts upgrade their positions on the equity.

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