Diamond Foods, Inc. (NASDAQ:DMND)
DMND is scheduled to report its fiscal fourth-quarter earnings after the closing bell today. Analysts are calling for a per-share loss of 3 cents, or a nickel worse than the food packager's year-ago results. Historically, DMND has struggled in the aftermath of its turns in the earnings confessional; it has missed its consensus bottom-line estimates in three of the past seven quarters, and shed an average of 14.2% in the week after the fact.
Nevertheless, investors are skeptical of DMND, as 32.8% of its float is sold short. That represents over 12 days' worth of pent-up buying power, should a short-squeeze scenario arise -- most certainly a bullish contrarian indicator. On top of that, not a single brokerage firm covering the equity has handed out a "buy" or better recommendation, and the consensus 12-month price target is $18.80, which represents a significant discount to where the shares are currently trading.
Long story short, an unwinding of pessimism among the shorts and/or the brokerage bunch -- in the form of a short-covering rally, analyst upgrades, as well as upward price-target revisions -- could provide a contrarian boon.
Buffalo Wild Wings (NASDAQ:BWLD)
BWLD will be giving a presentation tomorrow morning at the Wells Fargo 2013 Retail and Restaurant Summit in Boston. The restaurant has authority to speak, too, given its 50% year-to-date advance. The shares continue to outperform, as well, ushered north by their 40- and 80-day moving averages. In fact, the stock closed Friday at $109.50, or just a few dollars short of its $112.01 all-time high, notched on Sept. 17.
Still, sentiment on the wing-and-beer specialist is negative. BWLD features a Schaeffer's put/call open interest ratio (SOIR) of 1.40, meaning puts easily outnumber calls among options expiring in three months or less. Relatively speaking, the current SOIR ranks higher than 63% of like readings recorded during the past 12 months, suggesting a stronger-than-usual bias toward puts (relative to calls) among short-term speculators. As these puts unwind in the face of BWLD's stalwart technicals, the shares could benefit from some contrarian tailwinds.
Elsewhere, eight out of 17 analysts give the stock a tepid "hold" rating. Plus, the restaurant's average 12-month estimate stands at $112.12, or less than 3% from its current perch. Should the experts begin to capitulate, a series of upgrades and/or price-target hikes could boost the security to new heights.
General Motors Company (NYSE:GM)
Tomorrow morning, September motor vehicle sales will be made public. Suffice it to say, GM shareholders and option traders will be waiting with bated breath. Whatever happens, there's no denying the automaker has had a solid year on the charts, tacking on almost 57% to $36.37 during the last 52 weeks. Along the way, pullbacks have routinely been cushioned by the shares' 100-day moving average. Even from a fundamental perspective, the security has received good news, last week obtaining a credit upgrade from Moody's Investors Service.
Despite that impressive technical showing, GM's SOIR stands at 0.84, which ranks in the 95th percentile of its annual range. Put differently, short-term traders have rarely been so put-skewed (relatively speaking) during the past 12 months. Additionally, short interest comprises close to 9% of the stock's outstanding float -- and that's after falling 7.5% during the last two reporting periods. In other words, the shorts could already be in covering mode.
All that to say, if GM continues to drive to new highs -- it recently touched a two-year summit of $37.97 -- the option bears and shorts may begin hitting the exits with a new sense of urgency, giving the shares another lift in the process.
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