4 Stocks to Keep an Eye on Next Month

First Solar, Inc. (NASDAQ:FSLR), Glu Mobile Inc. (NASDAQ:GLUU), Herbalife Ltd. (NYSE:HLF), and Illumina, Inc. (NASDAQ:ILMN) have historically outperformed in June

by Alex Eppstein

Published on May 28, 2015 at 7:00 AM
Updated on Jun 24, 2020 at 10:16 AM

About a month ago, using data supplied by Schaeffer's Senior Quantitative Analyst Rocky White, I examined three stocks to watch in May. As we approach June, I decided to repeat this exercise to determine a few names with the potential to make big upside moves next month. This time around, we'll take a look at First Solar, Inc. (NASDAQ:FSLR), Glu Mobile Inc. (NASDAQ:GLUU), Herbalife Ltd. (NYSE:HLF), and Illumina, Inc. (NASDAQ:ILMN).

Below, you'll find a list of 24 stocks with positive returns at least 70% of the time since 2000, during the month of June. This data comes courtesy of Schaeffer's Quantitative Analyst Chris Prybal. Under the list, you'll also find some commentary on the four aforementioned names -- FSLR, GLUU, HLF, and ILMN -- and why they could be poised for another outsized move in June.

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First Solar, Inc. (NASDAQ:FSLR)

FSLR has advanced 15% year-to-date to trade at $51.28. What's more, in six of the past eight Junes, the shares have advanced -- with an average return of 5.4%. Last June, in fact, the stock soared 15%.

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Should history repeat itself, a capitulation among bearish option traders could energize FSLR's ascent. During the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock has amassed a put/call volume ratio of 2.07 -- just 2 percentage points from an annual high.

Glu Mobile Inc. (NASDAQ:GLUU)

GLUU has had a monster year, up nearly 66% to rest at $6.46, and consolidating atop support in the $6.40 area -- which corresponds to the equity's post-earnings upside gap from late April. Next month looks promising, too, as the shares have gained in six of the past eight Junes, for an average jump of 15.3% -- including 37.6% in 2014.

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Unlike the optimism witnessed among analysts, short-term traders have been extremely put-focused toward GLUU. The security's Schaeffer's put/call open interest ratio (SOIR) stands at an annual high of 0.56. Should option skeptics reverse course, it could result in tailwinds.

Herbalife Ltd. (NYSE:HLF)

HLF has surged 36.2% year-to-date to trade at $51.35 -- assisted by its supportive 10-week moving average -- and that momentum could continue next month. Looking back 10 years, the shares have advanced seven times in June, to the tune of a 3.7% average pop.

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Should HLF muscle higher next month, it could put the pressure on shorts. Nearly one-third of the equity's float is sold short -- thanks to Pershing Square Capital's Bill Ackman -- and it would take more than two weeks to cover these bearish positions, at average daily trading volumes. This sets up a potential short-covering rally.

Illumina, Inc. (NASDAQ:ILMN)

ILMN is a technical standout, boasting a 33% year-over-year lead to trade at $209.47 -- with an assist from its 40-week trendline. Also, the stock has outperformed the broader S&P 500 Index (SPX) by close to 12 percentage points over the last month. Historically speaking, ILMN has advanced in 11 of the past 14 Junes, averaging a 5.4% gain.

ILMN

A repeat performance could turn up the heat on option skeptics. ILMN's SOIR of 1.88 shows put open interest nearly doubles call open interest among options with a shelf-life of three months or less. What's more, this ratio ranks in the 92nd annual percentile. If these doubters start hitting the exits, the shares could get a lift.


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