Why Marriott Stock Could Continue Its Solid Run

Marriott International shares are outperforming on the charts, but shorts haven't bought into the uptrend

May 23, 2017 at 10:52 AM
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Shares of hotel operator Marriott International (NASDAQ: MAR) have put in an impressive performance in 2017, up more than 24%. These strong technicals were in full view earlier this month, when the stock gapped higher post-earnings -- barreling through the century mark, or two times its 2007 peak, and eventually notching a new record high.

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There's still plenty of skepticism levied toward MAR, which could serve as a boon for the shares as it starts to unwind. Short interest, for instance, has surged 45% since mid-February, even as the stock has added 15%. Not only does MAR's ability to rally in the face of such intense selling pressure speak volumes to its underlying strength, but it would take almost a week to cover these bearish bets, at the stock's average pace of trading. This leaves ample sideline cash available to help fuel MAR's fire.

There's also plenty of room for analysts to upwardly revise their ratings. Of the 17 brokerages covering MAR, 10 still maintain a lackluster "hold" recommendation. A round of upgrades could draw more buyers to the table.

It's also an affordable time to purchase premium on MAR options. While its Schaeffer's Volatility Scorecard (SVS) reading of 81 indicates the stock has tended to make outsized moves relative to what the options market has priced in, its Schaeffer's Volatility Index (SVI) of 19% ranks in the 16th annual percentile -- meaning low volatility expectations are currently being priced in to MAR's options.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this MAR commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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