ADT Stock Breaks Out After Selling Canadian Arm

The security company also announced a special dividend of 70 cents per share

Managing Editor
Oct 1, 2019 at 9:43 AM
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One of the better stocks on the New York Stock Exchange (NYSE) this morning is ADT Inc (NYSE:ADT), up 3.8% to trade at $6.51. This is after the home security specialist said it's selling its Canadian operations to telecom operator Telus Corp for $527.55 million. The deal is expected to be closed in the fourth quarter.

Today's breakout has ADT stock on track to topple its 200-day moving average on a closing basis for just the second time since early March. Since an Aug. 14 record bottom at $4.25, the shares have tacked on 53%, thanks to a huge 31.7% September gain.

A short squeeze is in play and could power additional gains. Shorts have begun tapering off, with short interest increasing by only 0.7% in the most recent reporting period. Nevertheless, short interest still accounts for 42.2% of ADT's total available float, and would take shorts 23.5 days to cover, at the stock's average pace of trading.

There's also pessimism to be unwound in the options pits. Amid relatively low absolute volume, at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ADT stock's 10-day put/call volume ratio of 1.29 ranks in the 87th annual percentile, meaning puts have been bought to open relative to calls at a quicker-than-usual clip.

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