Schaeffer's Trading Floor Blog

Highs & Lows: F5 Networks, Best Buy, Ryland Group, and Carnival

FFIV and BBY drifted lower, while RYL and CCL enjoyed runs higher

by 10/25/2012 5:01 PM
Stocks quoted in this article:

While the market saw the majority of its early gains unravel, the major indexes did manage to finish north of breakeven today. Against this backdrop, the overall number of stocks reaching new annual highs edged out those hitting new bottoms. There were 90 new peaks and 42 lows on the NYSE today, while the Nasdaq tallied 42 new highs and 48 lows. Among the names charting notable moves were F5 Networks, Inc. (NASDAQ:FFIV - 83.00), Best Buy Co., Inc. (NYSE:BBY - 15.17), The Ryland Group, Inc. (NYSE:RYL - 34.06), and Carnival Corporation (NYSE:CCL - 38.66).

  • On the heels of its poorly received quarterly reveal and this morning's barrage of negative analyst notes, tech concern FFIV plummeted to the $81.07 mark -- its worst price in over a year. While the stock is sitting on a 21.8% deficit for 2012, things could get much worse, as the bullish brokerage holdouts reassess their positions. There are 16 "buy" or better endorsements, versus 13 middling "holds," and not a single "sell" suggestion. Moreover, the average 12-month price target of $122.07 represents a 50.6% premium to FFIV's new annual nadir.

  • Earlier today, struggling electronics retailer BBY announced changes to its upper management and issued a warning for current-quarter earnings, which prompted a sell-off on the Street. The shares buckled to a decade-low of $15.07, which exacerbated its 35.1% year-to-date loss. Amid this technical weakness, though, optimism is growing in the options pits. The stock's 10-day call/put volume ratio of 3.47 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) lands nine percentage points away from an annual high, implying that traders on these exchanges have rarely purchased calls over puts at a faster clip during the past year. But there could be a less-than-bullish reason for this activity, as short interest accounts for 10.8% of the security's float. Oftentimes, short traders will buy calls as hedges for their pessimistic positions, and this could be what's happening here.

  • Homebuilder RYL has been quite a standout on the charts, soaring 116% since the beginning of the year, and outperforming the broader S&P 500 Index (SPX) by nearly 37 percentage points during the past three months. Adding to this impressive upswing, the California-based company flexed some fundamental muscle and unveiled stronger-than-anticipated third-quarter results last night. Yet, despite this strength, the brokerage bunch maintains a skeptical stance toward RYL. Only 30% of analysts covering the stock have doled out "buy" or better ratings, while the consensus 12-month price target of $30.40 is a $5 discount to today's more than four-year best of $35.40.

  • Finally, travel and cruise outfit CCL jumped to a 17-month peak of $39.40, after raising its full-year guidance on an increase in bookings. Considering the stock's healthy 18.4% return in 2012, it seems that short sellers could be exiting their bearish positions. Over the past month, short interest dropped 24.5% and now makes up 2.6% of the security's float. However, at the security's average pace of trading, it would take more than four sessions to buy back all of these shorted shares, which could translate into a contrarian tailwind for CCL.

permanent link
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

Partner Center

© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242 Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: service@sir-inc.com

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.