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Singles Only: 3 Outperforming Stocks Priced to Move

Tenet Healthcare, Radian Group, and Mueller Water may have further upside potential

by 10/3/2012 1:00 PM
Stocks quoted in this article:

Catching our eye in this week's edition of Singles Only are Tenet Healthcare Corporation (NYSE:THC), Mueller Water Products, Inc. (NYSE:MWA), and Radian Group Inc. (NYSE:RDN). A screen from allows us to isolate names that are low-priced but have performed well in 2012, despite skepticism on Wall Street.

The "Avg. Rating" column in the table below is indicative of analysts' opinion; a rating of 1.0 means all covering analysts rate the stock a "strong buy." A reading of 5.0 indicates unanimous "strong sell" ratings.


Healthcare facility concern THC is up more than 25% in 2012 and has gained roughly 70% on a year-over-year basis. Analysts, however, remain unimpressed. Of the 15 names following the stock, just four have deemed THC worthy of anything better than a "hold" rating. Additionally, Thomson Reuters reveals the average 12-month price target on the stock is $6.28, which is several cents below current levels.

What's more, options players have been crowding the bearish bandwagon. The 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) measures 0.57, which is higher than 94% of the past year's worth of readings. In other words, speculators have been buying to open put options at a near-annual-high-pace during the past two weeks.

MWA manufactures products and services related to the distribution of drinking water. The stock has outperformed the broader S&P 500 Index (SPX) -- on a relative-strength basis -- by nearly 31 percentage points in the past three months. During this time, the shares have glided higher along support from their 10-day moving average. What's more, the shares have doubled in value on a year-to-date basis.

Five of the eight analysts tracking MWA still name it a "hold," however, and the average 12-month price target of $4.02 sits south of the equity's current price. Elsewhere, it looks as though short sellers may finally be throwing in the towel. After a 17% drop in short interest during the past month, though, it would still take nearly seven days to cover all of the existing shorted shares.

Finally, short-term MWA options are relatively inexpensive right now. The stock's Schaeffer's Volatility Index (SVI) of 49% is lower than all but 4% of the past year's worth of readings.

Insurance company RDN is up a whopping 111% during the past 52 weeks and has outperformed the SPX by 37 percentage points during the past two months. Despite this uptrend, the stock can't garner one positive mention on Wall Street. Among the six analysts following the shares, there are five "hold" ratings and one bold "strong sell."

Meanwhile, short interest accounts for nearly one-third of the equity's float, offering ample fuel for a short-covering rally. And like MWA and THC, the 12-month price target for RDN is also south of the current share price. If analysts begin to come around to the bullish side, further buying power could emerge.

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