Best Stock to Buy After S&P Sell-Off

The freight shares have found a foothold at their 50-day moving average

Feb 7, 2018 at 12:18 PM
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As the U.S. stock market recovers from its worst sell-off in years, many traders have an eye out for bargain trading opportunities. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, freight specialist C.H. Robinson Worldwide Inc (NASDAQ:CHRW) has been one of the best stocks to buy after a massive S&P 500 Index (SPX) pullback. And if past is precedent, CHRW stock could be headed back to record-high territory.

Specifically, CHRW has averaged a one-month return of 39.78% following the last nine major S&P sell-offs -- the best of any stock since 1986 -- and boasts an 89% win rate. Based on the equity's current perch at $92.16, up 1.7% on the day, another move of this magnitude would put the shares near $128.79, well above their Jan. 26 record high of $100.18.

More broadly, CHRW shares have been trending higher since bottoming at an annual low of $63.41 last July, up more than 45%. Plus, the stock's recent pullback was quickly contained by its rising 50-day moving average -- a former level of resistance that seems to have now switched to a more supportive role.

Should C.H. Robinson Worldwide shares once again surge after a big SPX sell-off, a round of bullish brokerage notes could certainly draw more buyers to the table. Despite the stock's longer-term uptrend, 11 of 16 analysts maintain a "hold" or "strong sell" rating, while the consensus 12-month price target of $95 sits just 3.1% above current trading levels.

Additionally, the stock has been crushing short sellers, meaning it's ripe for a short squeeze. Short interest accounts for more than 12% of CHRW's available float, and would take nearly three weeks to cover, at the average pace of trading.

And for those looking to take advantage of options leverage, it should be noted that CHRW stock has consistently rewarded premium buyers over the past year. This is based on the equity's elevated Schaeffer's Volatility Scorecard (SVS) reading of 99 (out of 100).

 

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