2 Stocks to Watch Under $20: GameStop and Ford

GME is plummeting after earnings

Deputy Editor
Mar 27, 2024 at 2:53 PM
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Depending on who you ask, a recession is either right around the corner or the stock market is ready to rattle off a seismic bull run. As always, the answer is probably something in the middle of those two extremes. But due to the uncertainty surrounding the Federal Reserve’s rate cuts, investors are stuck in a holding pattern until more data defines the country's fiscal path.

Since bargains become popular when times are uncertain, we’d like to introduce a new weekly segment: Cheap Seats. Every week, we will profile two stocks under $20 with a market capitalization of at least $2 billion.

These are not outright "buy" recommendations, but interesting names – with cheap overhead – that are worth adding to your watch list. This week, we're taking a look at biotech stock GameStop Corp (NYSE:GME) and Ford Motor Co (NYSE:F)

GME might be a stock to buy on the dip, as the shares are plummeting today. Last seen down 15.7% at $13.06, the stock earlier hit a four-month low of $12.80. The company announced disappointing fourth-quarter results after the close yesterday, as well as an unspecified number of job cuts to control costs. 

GME's options pits have already seen 3.4 times the average daily options volume today, with 139,000 calls and 103,000 puts exchanged so far. The weekly 3/28 12.50-strike put is the most popular, where new positions are being opened. 

In the short term, and not entirely unexpected of the former meme stock, there is plenty of short interest that could lend itself to a short squeeze. The 59.55 million shares sold short represent 22.3% of the stock's available float, and would take over 17 days to cover. 

On the other hand, the shares of Ford Motor are on the rise today, after the automaker yesterday reaffirmed its 2024 guidance. According to the company's CFO, "things are looking pretty good" in the vehicle market. At last check, F was up 4% at $12.94. The stock has been middling between $12 and $13 since early February, up 7.7% since the start of 2024. 

Ford stock is also seeing attractively price premium at the moment. Its Schaeffer's Volatility Index (SVI) of 28% ranks in the low 6th percentile of its annual range, meaning options traders are pricing in low volatility expectations. The equity tends to outperform said expectations too, per its Schaeffer's Volatility Scorecard (SVS) of 80 out of 100. 

 

 

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