The Cosmetics Stock That Could Glow in February

Estee Lauder tends to outperform in February

Deputy Editor
Jan 30, 2020 at 1:07 PM
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Makeup manufacturer Estee Lauder Companies Inc (NYSE:EL) has been in cool-down mode since hitting an all-time peak just north of the $220 region on Jan. 17, thanks in part to a post-earnings bear gap that left the equity trading right below the $200 level. Fortunately for EL, though, familiar support at the 160-day moving average has helped contain some of these losses. Plus, Estee Lauder has historically been the best performer during the month of February, which could mean a rebound is right on the horizon. 

EL Chart Jan 30

Specifically, data from Schaeffer's Senior Quantitative Analyst Rocky White shows EL has averaged an 8.21% positive return during the past 10 years, and ended the month higher every single time. From its current perch at $196.40, a similar move would put the equity well above the aforementioned $200 region, at $212.52. 

Sentiment on the Clinique parent is split, with nine analysts calling it a "buy" or better, and nine saying "hold." The consensus 12-month price target of $213.09 represents a modest 8.2% premium to current levels. 

The options pits, on the other hand, have leaned bearish, evidenced by EL's 10-day put/call volume ratio of 6.67 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than all but 1% of all other readings from the past year, too, indicating a much bigger appetite for long puts of late. 

This is echoed in the security' Schaeffer's open interest ratio (SOIR) of 3.7, which sits in the 98th percentile of its annual range. This means short-term options players have been picking up puts at a much quicker than usual clip. 

 


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