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Small-Cap Spotlight: Boyd Gaming (BYD), EXACT Sciences Corp., and SUPERVALU INC. (SVU)

BYD, EXAS, and SVU are three low-valued stocks offering up contrarian plays

by 7/19/2013 11:23:19 AM
Stocks quoted in this article:

The iShares Russell 2000 Index (ETF) (NYSEARCA:IWM) has tacked on 23.6% in 2013, which is quite impressive considering the Dow and S&P 500 have added roughly 18% apiece year-to-date. This formidable price action was witnessed yesterday, when small-caps helped lead the equities markets to record peaks. Here are a few stocks within the sector that could be positioned to continue with this upward momentum -- and provide affordable, contrarian plays in the process -- including casino concern Boyd Gaming Corporation (NYSE:BYD), cancer detection issue EXACT Sciences Corporation (NASDAQ:EXAS), and grocery guru SUPERVALU INC. (NYSE:SVU). At Thursday's close, the market capitalization for the companies arrived at $1.05 billion, $877.11 million, and $1.68 billion, respectively.

Boyd Gaming Corporation (NYSE:BYD) has been tearing up the charts over the past six months, with the stock 77.2% higher to trade at $11.62. Despite this technical tenacity, option players have been piling up on bearish bets in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio has risen to 0.47 from its month-ago reading of 0.28. What's more, the current ratio ranks in the 93rd percentile of its annual range, meaning puts have been bought to open over calls with more rapidity just 7% of the time within the past year.

Fundamentally, the company is tentatively slated to take its turn in the earnings confessional in late July. BYD soared roughly 23% on April 24, on the heels of a solid first-quarter report. A mass exodus of option bears amid another strong quarterly showing could translate into a contrarian boon for BYD.

EXACT Sciences Corporation (NASDAQ:EXAS) has doubled in value since bottoming out at an annual low of $6.93 in mid-April. This upward momentum has been highlighted by the stock's 32-day moving average, which has helped usher the stock to its current perch at $14.28. Additionally, the equity has outpaced the SPX by nearly 58 percentage points throughout the same time frame.

Low expectations surround this outperformer, though. In fact, short interest rose more than 13% over the last two reporting periods, and now accounts for a brow-raising 17.1% of the stock's available float. It would take seven sessions to cover these shorted shares at EXAS' average daily trading volume. However, what's impressive is the stock's ability to rise to a nine-year peak of $14.70 on July 1, amid this selling pressure. Should the equity trek deeper into multi-year high territory, the scene is set for a short-covering rally to help fuel EXAS' fire.

The spotlight was on SUPERVALU INC. (NYSE:SVU) yesterday, as the stock soared nearly 17% in the wake of its stronger-than-anticipated earnings report. Thursday's positive price action was just more of the same for a security that's up almost 207% year-to-date. On the charts, this technical tenacity has SVU on pace to finish July north of its 32-month moving average -- a feat not accomplished on a monthly closing basis since May 2008.

From a contrarian perspective, the equity could be poised to continue its move north on the back of some brokerage-induced tailwinds. In spite of the equity's upward momentum, six out of the seven covering analysts deem the stock a tepid "hold." Plus, the consensus 12-month price target of $5.58 stands at a steep 27% discount the security's present price of $7.64. SVU could benefit from a re-evaluation of ratings, should these remaining holdouts follow in the footsteps of Cantor Fitzgerald or Citigroup -- which raised their respective price targets for the stock this morning.


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