Buzz Stocks: Coty, Starwood Hotels, and The Gap

U.S. markets look to be in for another rough day, with futures pointed lower ahead of the open. In company news, today's stocks to watch include cosmetics marketer Coty Inc (NYSE:COTY), hospitality expert Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT), and apparel retailer Gap Inc (NYSE:GPS). 

• COTY has reportedly purchased three Procter & Gamble Co (NYSE:PG) units for up to $12 billion. The acquisition has shares of Coty Inc pointed 15.1% higher ahead of the bell, adding to their already impressive year-to-date gain of 26%. In fact, just last week, the stock touched a record peak of $26.38, and closed last night just below this level at $26.05. Options traders have responded by buying to open COTY calls over puts at a feverish pace in recent months, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the equity's 50-day call/put volume ratio of 15.22 ranks in the 90th annual percentile.
  


• HOT announced plans to spin off its time-share business into a new public company called Vistana Signature Experiences Inc. On the charts, Starwood Hotels & Resorts Worldwide Inc has been consolidating in the $81-to-$82 region since hitting an all-time high of $87.99 in late April, closing at $81.76 yesterday. Despite being within striking distance of that technical milestone, half the analysts tracking the shares consider them worthy of just a "hold" rating. This could pave the way for future upgrades, which could be supportive of HOT.


• GPS will be closing one-quarter of Gap stores in the coming years -- including 140 in 2015 -- due to weak sales. Roughly 250 corporate employees will also be laid off. Shifting gears, Gap Inc has struggled since its late-March year-to-date high of $43.90, down 13% to rest at $38.20 -- pressured by its 20-day moving average. Short sellers have been wagering on extended losses. During the two most recent reporting periods, short interest on GPS soared 44.4%, and now accounts for almost 9% of the stock's float. It would take about one week to repurchase all of these bearish bets, at the equity's average daily trading levels.