HES Stock Looks Good for April

The equity is getting a sector boost today

Assistant Editor
Apr 2, 2020 at 2:47 PM
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Earlier this week, Schaeffer's Senior Quantitative Analyst, Rocky White, broke down the best performing stocks in April over the last 10 years. One of those stocks is crude oil concern Hess Corp (NYSE: HESS). Looking over the last decade, Hess boasts an average April return of 4.6%, with nine out of 10 returns positive, making its just one of two in its sector to make the cut. Today, oil and energy stocks are gaining momentum as prices surge, bringing HES up 10.5% to trade at $35.36, despite a price target cut from Credit Suisse earlier in the day. 

Drilling down, Hess hit a 16-year low of $26.06 in mid-March, shortly after a dramatic bear gap sent the stock breaching long-time support at the $55 region earlier in the month. Since then the security has struggled to gain momentum off this bottom, with today's attempt threatening to run out of steam at the descending 20-day moving average. 

HES Chart April 2

Analysts are still bullish on the energy name. Coming into today, 10 out of 14 in coverage sported a "strong buy" or "buy" rating, and the remaining four called HES a tepid "hold." Meanwhile, the current target price of $54.5 is a 58.4% premium to current levels. 

Shorts have been piling on in recent weeks, up 97.3% to 20.13 million shares in the last two reporting periods. These pessimistic positions make up 7.4% of the stock's available float, or over six days at its average pace of trading. 

Echoing this, 3.6 puts have been bought for every call in the last 10 days at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 95th percentile of its annual range, suggesting long puts are being picked up at a much quicker-than-usual clip. 

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