Schaeffer's Trading Floor Blog

Highs and Lows: Groupon, Molycorp, PepsiCo, and PetSmart

GRPN, MCP, PEP, and PETM were among the equities making notable moves today

by 8/16/2012 2:29 PM
Stocks quoted in this article:

Major equities markets are noticeably higher this afternoon, as encouraging housing data and tech-sector earnings have overshadowed the Philadelphia Fed's manufacturing report. So, it should come as no surprise that the number of equities reaching new annual highs has easily topped those touching new lows today. At last check, the NYSE tallied 116 securities at 52-week highs, versus seven new lows. Over on the Nasdaq, there are 62 annual acmes and just 12 annual lows. Among the stocks making notable runs today are Groupon Inc (NASDAQ:GRPN - 5.01), Molycorp, Inc. (NYSE:MCP - 11.35), PepsiCo, Inc. (NYSE:PEP - 73.31) and PetSmart, Inc, (NASDAQ:PETM - 70.32).

  • Still reeling from its poorly received second-quarter report, GRPN rolled to a post-IPO worst of $4.97 today. Indeed, things look rather drab on the charts for the daily deals site. In 2012, the stock has given up more than 74%, and has lagged the broader S&P 500 Index (SPX) by 58% over the past 60 sessions. Despite this overall decline, the options pits are still lined with calls, as evidenced by the stock's 10-day call/put volume ratio of 1.35 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). However, short sellers could be accountable for some of the call buying of late, picking up optimistic options to hedge their pessimistic positions. Short interest on the equity surged 101.5% during the past two reporting periods, and makes up a sizeable 24.5% of GRPN's available float.

  • Up next, MCP said it will attempt to raise $495 million by selling senior notes and stock, in order to help fund operating expenses through the first six months of 2013. At the open, the shares ripped back to an all-time low of $11.16, which only worsened their roughly 50% year-to-date deficit. On a relative-strength basis, the stock has fared no better, underperforming the SPX by 48 percentage points during the past two months. There seems to be plenty of negativity already priced into MCP. Short interest makes up nearly 30% of the security's available float, and at its average pace of trading, it would take more than seven days for all of these bearish bets to unwind.

  • Refreshments giant PEP announced some changes at its executive level. Sarah Robb O'Hagan has stepped down as president of Gatorade, while Debra Crew was named president of PepsiCo Americas Beverages business. The company will name new leaders at its Gatorade and Western Europe divisions soon. Upon this news, the stock jumped to the $73.33 mark -- its highest price since September 2008. Checking out the sentiment backdrop, the options arena appears to be skeptically inclined. The stock's 10-day put/call volume ratio of 0.79 on the ISE, CBOE, and PHLX ranks in the 75th percentile of its annual range, signaling that traders on these exchanges have made bearish bets over bullish at a faster-than-usual pace during the past couple of weeks. What's more, the security's 50-day put/call volume ratio of 0.71 lands just one percentage point from an annual high.

  • Finally, PETM reached an all-time best of $72.50 earlier in the session, on the heels of its consensus-beating second-quarter earnings. Plus, the pet-care retailer upped its full-year profit expectations. Technically speaking, the stock is doing quite well for itself, adding more than 31.5% since the beginning of the year, and enjoying a year-long upswing of more than 62.3%. Options players are optimistic toward the security. In light of this upbeat performance, PETM also garnered several upgrades and price-target hikes today, and there could be more around the bend. There are 13 "holds," versus eight "buy" or better ratings, while the average 12-month price target of $66.44 is a $6 discount to today's multi-year perch.

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