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Drybulk shippers have been on a tear recently, and DryShips Inc. (NASDAQ:DRYS) is no exception. Since trading south of $2 late last month, the shares have tacked on roughly 50% to flirt with $3.00. "Normally, it would be unnerving to buy after a 50% rally, but we have to put the move into context," notes this Barron's column. "Before the financial crisis and the collapse of Greece, DryShips' home market, shares changed hands north of $100." As such, DRYS could be emerging as a stock "rising from the ashes of collapse," and could enjoy more upside into potential resistance near $4, the article goes.
DRYS has skyrocketed about 27.9% so far this month, and touched a new annual high of $3.22 earlier this week. Furthermore, the shares have outperformed the broader S&P 500 Index (SPX) by nearly 63 percentage points during the past three months. While the stock's Relative Strength Index (RSI) now stands at 76 -- in overbought territory -- DRYS could have more contrarian fuel in the fire, should the lingering bears capitulate.
Not one of the six analysts following DRYS considers it worthy of a "buy" or better rating. Plus, the consensus 12-month price target on the security rests at $2.25, representing a serious discount to DRYS' current share price. Should DRYS extend its rebound, a round of upgrades and/or price-target hikes could lure more buyers to the bandwagon.
Meanwhile, the equity's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) has ascended to 0.21 -- higher than 84% of all other readings of the past year. In other words, option buyers have picked up DRYS puts, relative to calls, at a much quicker-than-usual clip during the past two weeks. An unwinding of these bearish bets could also translate into a contrarian tailwind for DryShips Inc. (NASDAQ:DRYS).