Stuff Your Stockings With These 30 Stocks

Barrick Gold Corporation (USA) (NYSE:ABX) and Silver Wheaton Corp. (USA) (NYSE:SLW) usually end the year on a high note

Dec 21, 2016 at 10:40 AM
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Yesterday, we took a look at the 30 worst stocks to own during the week between Christmas and New Year's -- a list dominated by the real estate sector. Today, we'll see what history has to say about the best stocks to own during the same time period.

Courtesy of Schaeffer's Senior Quantitative Analyst Rocky White, the list below includes the 30 best performers during the post-Christmas week, when looking back 10 years. To qualify, stocks have to be optionable, have traded for at least eight years, and been perched above $10 at Monday's close. As you can see, precious metal stocks account for a disproportionate number of the outperformers, including Barrick Gold Corporation (USA) (NYSE:ABX) and Silver Wheaton Corp. (USA) (NYSE:SLW).


best stocks though new years dec 21

In the past decade, ABX has been positive during the last week of the year seven times. On average, the gold stock has advanced an impressive 2% over that span. A repeat performance would be much appreciated by shareholders, who have watched Barrick decline badly since topping out at a three-year high of $23.47 in early July -- and even slip below its 50% retracement level of its late-2015 lows and the aforementioned peak. At last check, the stock is down 1.7% at $14.09, dropped by a downgrade to "hold" from "buy" at TD Securities, which also slashed its target price by $7 to $18.

Plenty of options traders have been banking on a rebound. ABX sports a 10-day call/put volume ratio of 2.75 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- ranking in the bullishly skewed 86th annual percentile. Of course, with short interest recently rising, a portion of these calls -- especially at out-of-the-money strikes -- may have been purchased by short sellers hedging against a near-term breakout.

In any case, now is an ideal time to purchase premium on short-term Barrick Gold Corporation options. The stock's Schaeffer's Volatility Index (SVI) of 44% rests in the low 11th annual percentile, suggesting muted volatility expectations are being priced in. Likewise, ABX's Schaeffer's Volatility Scorecard (SVS) of 86 indicates the underlying has tended to make bigger-than-expected moves in the past year, relative to what the options market has priced in.

SLW has historically outperformed in the week following Christmas, as well. In the last decade, the stock has been positive during this period 70% of the time, with an average one-week gain of 2.5%. As with its sector peer, Silver Wheaton could use a repeat performance, as the shares have taken a serious haircut since hitting a three-year high of $31.35 in August. Right now, the stock is down 0.7% at $17.36.

As with Barrick Gold traders, SLW speculators have been purchasing calls over puts at a breakneck pace, seemingly ignoring the technical woes. The stock's 50-day ISE/CBOE/PHLX call/put volume ratio of 4.98 rests only 6 percentage points from an annual peak. However, ulterior motives could be in play here, too, considering the most recent reporting period saw an 18.4% jump in short interest.

For those looking to scoop up short-term options on the cheap, now's a good time to strike. Silver Wheaton Corp. sports an SVI of 43% -- below 84% of comparable readings from the past year. Moreover, the silver stock's SVS checks in at a high 85.

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