Barron's Strikes Divergent Tones in Whole Foods, Monsanto Write-Ups

Barron's has high hopes for Whole Foods Market, Inc. (WFM) -- but not for Monsanto Company (MON)

Jun 6, 2016 at 10:23 AM
facebook X logo linkedin

Barron's weighed in on several stocks over the weekend. A bullish write-up on organic grocer Whole Foods Market, Inc. (NASDAQ:WFM) has sent the stock sharply higher, while a conversely skeptical piece on Monsanto Company's (NYSE:MON) potential merger with Bayer AG is weighing on the agricultural firm's shares. With the stocks going in different directions, the reactions among bullish options traders may be quite different.

First up, Barron's said WFM has "healthy upside potential" (subscription required), citing "corporate cost cuts that are fueling more competitive pricing in stores, and the launch last month of a value chain that could unlock new markets." The positive commentary has the stock 3.1% higher at $35.12, and on track for its highest close since early August. What's more, WFM has recently muscled into positive year-to-date territory, potentially setting up the shares for more gains.

Hopes are running high in the options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 3.99 WFM calls for each put during the last two weeks. The corresponding call/put volume ratio ranks just 6 percentage points from a 12-month peak.

On the other hand, bearish analysts may need to start rethinking things. Of the 19 brokerages tracking Whole Foods Market, Inc., 17 have handed out a "hold" or "strong sell" rating. Also, the stock's consensus 12-month price target of $30.19 represents a steep discount to current levels. In other words, WFM could benefit from a round of upgrades and/or price-target hikes.

Shifting our gaze, MON is off 1.1% at $109.77, after Barron's waxed pessimistic on a potential Bayer acquisition (subscription required). While the shares have surged about 11% year-to-date due to the M&A rumblings, the publication's advice is to "take gains while the sun is shining," adding "better values abound."

This likely isn't what bullish options traders want to hear. During the past two weeks, MON has racked up an ISE/CBOE/PHLX call/put volume ratio of 4.53, outstripping 84% of all readings from the past year. As a result, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.38 sits in the low 9th annual percentile. If the Bayer deal ultimately falls through and/or these option bulls begin to hit the exits, Monsanto Company stock could be negatively impacted.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI