Cigarette Stock Set for Best Day in 19 Years on Small-Cap Shakeup

Tetra Tech is expected to report its fiscal third-quarter earnings next week

Deputy Editor
Jul 26, 2019 at 1:18 PM
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Tobacco concern Vector Group Ltd (NYSE:VGR) is set to join the S&P SmallCap 600 ahead of the open next Thursday, Aug. 1, replacing engineering services name Tetra Tech Inc (NASDAQ:TTEK) as the latter moves on to the S&P MidCap 400 Index (MID). The benchmark adjustments come as current MID constituents Chemical Financial (CHFC) and TCF Financial (TCF) prepare to merge under TCF's name.

VGR stock is eyeing its best day since June 2000 as a result, up 14.7% at $10.99. The stock gapped above its 160-day moving average at the open, and is on pace to close above this trendline for the first time since March 2018.

With a short interest ratio of 10 days to cover, we could be seeing some of the weaker bearish hands hitting the exits on VGR today. However, the stock has yet to close above its looming 200-day moving average, so a large-scale short-covering situation isn't exactly a given -- even as the equity reclaims positive year-to-date territory for the first time in over a month.

TTEK, on the other hand, is down 4.6% at $81.17, just one day after hitting an all-time high of $86.56. The shares have rallied more than 58% year-to-date, and remain comfortably above support at their 30-day moving average.

The newly minted MID member is set to release its fiscal third-quarter earnings after the close next Wednesday, July 31, right ahead of its index relocation. Historically, TTEK earnings have been well received, with the equity finishing higher in the session after each of its last six reports. The stock has averaged a gain of 6.3% over those six post-earnings days, and even clocked a massive 9.6% jump the day after its first-quarter earnings in January. This time around, options traders are pricing in a one-day move of 7.5%. 

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