Buzz Stocks: Herbalife, El Pollo Loco, Whiting Petroleum

Today's stocks to watch in the news include Herbalife Ltd. (HLF), El Pollo Loco Holdings Inc (LOCO), and Whiting Petroleum Corp (WLL)

Mar 13, 2015 at 9:25 AM
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Futures are signaling a lower open, as traders take a cautious stance ahead of next week's Federal Open Market Committee (FOMC) policy-setting meeting. Meanwhile, among specific equities in focus are nutritional supplement specialist Herbalife Ltd. (NYSE:HLF), quick-service restaurant chain El Pollo Loco Holdings Inc (NASDAQ:LOCO), and oil-and-gas issue Whiting Petroleum Corp (NYSE:WLL).

  • HLF is up more than 5% in electronic trading, amid reports the FBI is investigating affiliates of Bill Ackman's Pershing Square Capital Management LP for possible manipulation of HLF stock. The two have had a storied past, which has put pressure on shares of Herbalife Ltd. Year-over-year, in fact, the equity has shed almost 42% to trade at $33.25. In the options pits, although the security was targeted by both bulls and bears ahead of its late-February earnings report, long calls have picked up steam. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day call/put volume ratio of 0.71 ranks in the 77th annual percentile, meaning calls have been bought to open over puts at a faster-than-usual clip in recent months.

  • True to form, LOCO is headed higher, after the company unveiled a stronger-than-forecast fourth-quarter earnings report and higher-than-expected full-year profit forecast. Specifically, after closing last night at $24, shares of LOCO are up 10% ahead of the bell. The equity has been in rebound mode in 2015, tacking on 20.2%, yet skepticism can be found all around the Street. At the ISE, CBOE, and PHLX, for example, speculators have bought to open 1.21 puts for each call over the past two weeks. Elsewhere, short interest accounts for nearly 29% of the equity's available float.

  • WLL rallied big on Monday, following reports the company was looking for a potential buyer. Today, the equity is bracing for a 7% drop out of the gate, amid reports that Whiting Petroleum Corp will instead auction off land in Texas and a number of pipeline assets. Today's projected price move is just more of the same for a stock that's surrendered nearly 59% since topping out at an all-time peak of $92.92 in late August. A continued slide may prompt a round of downgrades and/or price-target cuts, which could apply additional pressure on the shares. Currently, 75% of covering analysts maintain a "buy" or better rating on WLL, while the average 12-month price target of $45.91 stands at a 20% premium to last night's close at $38.36, as well as in territory not charted since late November.
 

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