Can Weight Watchers International, Inc., Planet Fitness Inc Prove Doubters Wrong?

Short interest on Weight Watchers International, Inc. (NYSE:WTW) and Planet Fitness Inc (NYSE:PLNT) is sky-high

by Alex Eppstein

Published on Dec 31, 2015 at 2:00 PM

Last week, we took a look at two health-conscious stocks that could fatten some portfolios in 2016. With New Year's Day just around the bend (and with it, plenty of resolutions for better lifestyle choices), we thought we'd take a look at a couple more related stocks -- namely, Weight Watchers International, Inc. (NYSE:WTW) and Planet Fitness Inc (NYSE:PLNT).

If you follow the markets closely, you know that WTW has been speeding up the charts since Oprah Winfrey agreed to invest in (and endorse) the weight-loss company -- including a massive bull gap yesterday. Today, however, the shares are taking a breather, off 0.3% at $22.98.

That hasn't stopped traders from placing bullish bets. According to Trade-Alert, buy-to-open activity is detected at the weekly 1/8 24.50- and January 2016 25-strike calls. In short, these short-term bettors think WTW will regain its momentum from the past few months, and topple the out-of-the-money strikes by the respective expiration dates.

From a contrarian perspective, Weight Watchers International, Inc. could get an additional lift from a round of short-covering activity. After all, 41.7% of the stock's float is sold short, representing 6.6 days' worth of pent-up buying power, at average volumes.

Shifting gears, PLNT is 2.2% higher at $15.98, but has been locked in a consolidation pattern between $15 and $16 since mid-November. Intraday options volume is extremely light on this stock -- with just 10 calls on the tape so far, and not a single put.

Speaking more broadly, opinions are mixed on PLNT. On the one hand, all nine brokerages covering the shares have designated them a "strong buy," and the consensus 12-month price target of $21.30 stands in all-time-high territory for the Wall Street rookie.

On the other, over one-fifth of the stock's float is sold short, after short interest swelled 42.2% during the past two reporting periods. At Planet Fitness Inc's average daily volumes, it would take nearly two weeks to cover these positions.

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