KEM Stock Breaks Out Amid Buyout Buzz

The stock is eyeing a new yearly high in response

Digital Content Manager
Nov 12, 2019 at 10:00 AM
facebook twitter linkedin

A buyout proposal from Taiwanese sector peer Yageo Corp has the shares of electronic components maker Kemet Corporation (NYSE:KEM) up 10.8% at $25.60 -- eyeing a fresh yearly high. Specifically, Yageo said it plans on purchasing Kemet for $1.58 billion, or $27.20 per share -- a roughly 18% premium to KEM's Monday close -- in hopes of expanding globally. 

Should these gains hold, KEM could notch its biggest percentage gain on a daily basis since May 16. Since its early September lows, the security has climbed higher, with pullbacks caught by its 20-day and 100-day moving averages. While the stock has cooled since running into pressure at the $24 level, today's pop has KEM breaking out of this region, set to close north of here for the first time since Sept. 2018. 

While KEM only holds two analysts ratings, both in coverage call it a "strong buy." But, the consensus 12-month target price of $25.67 is now a discount to its current perch, implying there's ample room for price-target hikes that could boost the stock. 

Despite this recent positive price action, short sellers have latched on to the equity, rising 19% in the last two reporting periods to 12.69 million shares sold short. These pessimistic positions make up nearly a quarter of KEM's available float, and would take over two weeks to cover at the equity's average pace of trading. Should some of these bearish bets begin to unwind, it could put some additional wind at the security's back. 


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners