Church & Dwight Co., Inc., Coty Inc Flash Buy Signals With Trendline Crossover

CHD and COTY could force short sellers and bearish analysts to rethink things

Jan 26, 2017 at 11:22 AM
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Yesterday, Schaeffer's Senior Quantitative Analyst Rocky White called our attention to 20 stocks to buy, based on predictive technical signals. Having already dug deeper into the Bollinger Band buy signals, we'll shift our attention to stocks that have just crossed over their 50-day moving averages. On the list below, two names to watch are Church & Dwight Co., Inc. (NYSE:CHD) and Coty Inc (NYSE:COTY):

50 day moving average crossover stocks jan 26

Schaeffer's Quantitative Analyst Chris Prybal describes CHD as "strong as an ox," especially over the long term. While he adds the short-term charts "aren't the best looking," shares of the Arm & Hammer parent have still advanced almost 9% since their early December low to trade at $46.25.

Plus, if CHD's crossover of its 50-day trendline results in more gains, there's plenty of potential for tailwinds from a skeptical Wall Street. For example, 13 of 17 analysts rate the stock a "hold" or worse, leaving the door open for upgrades. Not to mention, the shares sport a short-interest ratio (SIR) of 5.80, meaning there's a strong possibility of a short-squeeze situation on the near-term horizon.

chd stock daily jan 26

Turning to COTY, the company recently bought Procter & Gamble Co's (NYSE:PG) beauty business, making it the third largest cosmetics firm in the world. Despite this, Prybal notes that COTY shares have nonetheless pulled back near their $17.50 initial public offering (IPO) price, last seen at $19.79. Thus, he thinks of the stock as a potential "rotation play" or "buy the losers"-type trade.

If the shares' crossover of the 50-day trendline is a sign of good things to come, a capitulation among the bearish options crowd could fuel even more momentum. After all, COTY's Schaeffer's put/call open interest ratio (SOIR) stands at a top-heavy 1.84 -- in the put-skewed 85th annual percentile. Plus, the stock's SIR sits at 7.90, while 60% of analysts maintain tepid "hold" recommendations -- suggesting short covering and/or upgrades could bolster the shares on the first signs of life.

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