2 Stocks for Put Buyers to Watch

Dick's Sporting Goods, Inc. (NYSE:DKS) and Sears Holdings Corp (NASDAQ:SHLD) have historically put in weak second-quarter performances

by Karee Venema

Published on Apr 1, 2016 at 3:11 PM
Updated on Jun 24, 2020 at 10:16 AM

Following the roller-coaster ride that was the first quarter, stocks have kicked off the second quarter on a similar note. Looking ahead, Schaeffer's Senior Quantitative Analyst Rocky White pulled together a list of stocks that have historically put in positive and negative performances in the second quarter over the past 10 years. While these three names should be on bulls' radar, bears might want to keep an eye on retailers Dick's Sporting Goods, Inc. (NYSE:DKS) and Sears Holdings Corp (NASDAQ:SHLD).

160401worst2Qstocks

DKS has put in a stellar run since bottoming at a year-to-date low of $33.44 in mid-January, up 41%. This rally appears to have petered out near the $48 level -- an area that rejected the stock's advances in late October -- with DKS last seen at $47.20. If past is precedent, the equity could be poised to pare a portion of its recent gains. In fact, DKS has been positive in just two of the past 10 second quarters, averaging a loss of 4%.

Options traders, meanwhile, have recently been switching to a more bullish stance on DKS. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, Dick's Sporting Goods, Inc.'s 10-day call/put volume ratio of 5.62 sits higher than 70% of all comparable readings taken in the past year.

SHLD has had a terrible time on the charts over the past 12 months, down 61% at $14.81. What's more, the shares hit a 12-year low of $14.50 on March 29. The second quarter hasn't been kind to SHLD, either, with the stock turning in a positive second-quarter performance just 20% of the time over the last decade -- and averaging a loss of 10.2%.

Skepticism has been running rampant on the underperformer, as well. In the options pits, SHLD's front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 2.36 indicates that near-the-money puts more than double calls in the April series. Additionally, almost three-quarters of Sears Holdings Corp's float is sold short.


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