Buzz Stocks: Avon Products, Inc., Polaris Industries Inc., and KaloBios Pharmaceuticals Inc

Today's stocks to watch include Avon Products, Inc. (AVP), Polaris Industries Inc. (PII), and KaloBios Pharmaceuticals Inc (KBIO)

by Kirra Fedyszyn

Published on Dec 17, 2015 at 9:50 AM
Updated on Jun 24, 2020 at 10:16 AM

U.S. stocks are mixed this morning, as traders continue to digest Wednesday's historic Fed decision and a round of mixed economic data. Among the equities in focus are cosmetics producer Avon Products, Inc. (NYSE:AVP), off-road vehicle manufacturer Polaris Industries Inc. (NYSE:PII), and biotech interest KaloBios Pharmaceuticals Inc (NASDAQ:KBIO). 

  • AVP is up 14.9% at $4.70, as private investment firm Cerberus Capital Management has announced that it will take a 17% stake in the company, while also purchasing 80% of Avon Products, Inc.'s North American business. AVP's North American business will subsequently be separated from its parent into a private company. AVP has been trending lower on the charts for more than two years, shedding 48% so far in 2015 alone, but the shares have bounced back since hitting an all-time low of $2.41 in mid-November. In fact, the shares are on pace to topple their 20-week trendline for just the second time since April.  Among analysts, AVP holds only one "buy" rating, compared to 11 ratings of "hold" or worse. But options traders are hoping the stock will continue its rally. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Avon has a 50-day call/put volume ratio of 7.98 -- just 1 percentage point shy of an annual high.
  • PII is 7.2% lower at $88.39, after cutting its full-year profit and sales growth outlooks. The company cited weak demand for its off-road vehicles and snowmobiles, making it just the last in a line of retailers to blame the weather for its disappointing numbers. Polaris Industries Inc. has given up 41.6% of its value so far this year, and hit a new two-year low of $87.22 earlier today. Traders are distinctly pessimistic on the stock, as 14.9% of its available float is currently sold short -- accounting for nearly two full weeks of trading, at the equity's typical volumes. What's more, PII has a Schaeffer's put/call open interest ratio (SOIR) of 5.8 -- in the 100th percentile of readings taken in the past year -- indicating that near-term options traders haven't been more put-heavy any time in the last 12 months.
  • KBIO was halted ahead of the bell, with the shares poised to drop more than 50% from their Wednesday perch of $23.59, on news that CEO Martin Shkreli was arrested on charges of securities fraud. According to reports, Shkreli illegally used assets from Retrophin Inc (NASDAQ:RTRX), where he previously served as chief executive, to pay off debts after his former hedge fund, MSMB Capital Management, lost millions of dollars. The shares of KaloBios Pharmaceuticals Inc spiked over 500% higher in November, when the company announced that Shkreli became majority shareholder. Since then, however, short sellers have flocked to the security. Currently, 36.9% of KBIO's total float is sold short -- an increase of nearly 125% over the past reporting period. At the stock's average pace of trading, however, it would take less than a session for traders to cover their bearish positions.

A Schaeffer's 39th Anniversary Exclusive!

8 Top Stock Picks for 2020

Access your FREE insider report before it's too late!


  
 
 

Partnercenter