25 of the Best Stocks to Own in January

Now could be a prime time to purchase options on HII

Assistant Editor
Jan 7, 2021 at 1:38 PM
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After the historic year that was 2020, it only makes sense that 2021 would start off with a bang. As we approach the beginning of a new presidency, we looked to find the best-performing stocks for the month of January. One particular name worth highlighting is aerospace and defense concern Huntington Ingalls Industries Inc (NASDAQ:HII), which stands at the top of our list of the best stocks to own this month. Below, we'll take a look at how HII has performed lately, and why buying options on the equity might be worth considering.

Best of January

According to Schaeffer's Senior Quantitative Analyst Rocky White, Huntington Ingalls stock has averaged a January gain of 5.7% over the past 10 years, with 100% of these returns positive -- making it the only name with consistently positive one-month returns.

From its current perch at $170.47, a move of similar proportions would put HII above the recently resistant $180 mark for the first time since late July. While the stock is still a ways away from its pre-pandemic levels, support at the 50-day moving average has kept several pullbacks at bay. Plus, the security is testing its footing back atop the formerly supportive 20-day moving average, which kept a lid on shares during the latter half of December.

HII Chart January 7

Over the last 10 weeks, options bears have taken notice of the stock. According to data at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Huntington Ingalls stock's 50-day put/call volume ratio of 1.07 ranks in the 81st annual percentile. In other words, puts have been bought to open over calls at a quicker-than-usual clip. Should some of this pessimism begin to unwind, it could put some additional wind at the equity's back, too. 

Now seems to be an opportune time to speculate on HII's next move with options, as the security's Schaeffer's Volatility Index (SVI) of 33% sits in the 18th percentile of its annual range. This means option traders are pricing in relatively low volatility expectations at the moment -- a boon for premium buyers. 

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