McCormick & Company Stock Gets Hotter on New Acquisition

The equity is up over 11% year-over-year

Deputy Editor
Nov 24, 2020 at 10:00 AM
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McCormick & Company Inc (NYSE:MKC) is in the spotlight today, after news broke that the Frank's RedHot and Old Bay hot sauce parent is acquiring another hot sauce brand. The company is buying Cholula from private equity firm L Catterton for $800 million, and is confident the popular condiment be a growth accelerant. The deal is expected to boost MKC's earnings in 2021. 

Up 1.9% at $186.48 at last check, McCormick & Company stock is fighting to gain traction after steadily moving lower on the charts since its mid-October's rally attempt. Over the last week, MKC has been pressured by the 150-day moving average, after the stock closed under it for the first time since early May. Year-over-year, the equity is still up 11.4%. 

There is plenty of room for upgrades going forward, with seven of the eight analysts in coverage at a "hold" or worse rating. Meanwhile, the 12-month consensus price target of $176.10 is a 5.3% discount to last night's close. 

The options pits are looking more bullish, per MKC's 10-day call/put volume ratio of 2.77 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 97% of readings from the past year, showing calls are being picked up at a much-faster-than-usual clip as of late. 

Lastly, now looks like a good time to weigh in on MKC's next move with options. The security's Schaeffer's Volatility Index (SVI) of 23% sits in the low 9th percentile of its annual range. In other words, the stock sports attractively priced premiums at the moment.

 

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