History Suggests a General Mills Stock Surge

Near-term premiums look attractive at the moment

Managing Editor
Aug 5, 2019 at 1:25 PM
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Cereal maker General Mills, Inc. (NYSE:GIS) is down 0.8% at $53.20 this afternoon. GIS has been stuck in between the $52 and $54 levels since mid-May, with added support emerging at the 80-day moving average in late June. The shares touched an annual high of $54.74 just last month, and despite today's drop, remain 38% higher year-to-date.

Implied volatilies on the equity are at historically low levels, per GIS' Schaeffer's Volatility Index (SVI) of 20%, which registers in the 9th percentile of its annual range. According to Schaeffer's Senior Quantitative Analyst Rocky White, in the four other times in the past five years the equity has been trading near a 52-week high while its SVI ranked in the 20th annual percentile or lower, it resulted in an average one-month gain of 5.3%.

Daily GIS with 80MA and Highlight

Albeit amid absolute light volume, speculators in the options pits have been notably call-skewed. The security's Schaeffer's put/call open interest ratio (SOIR) of 0.54 stands in the low 20th percentile of its annual range, exhibiting a rare level of interest in short-term call contracts. 

In terms of analyst outlook, there remains plenty of room for more upgrades, with eight of 13 covering firms sporting a "hold" recommendation on GIS. What's more, the stock's average 12-month price target remains in-line with current trading levels, also leaving the door open for price target hikes.

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