This Rebounding Retail Stock Has Room To Run

Analyst sentiment has been overwhelmingly bearish on outperforming RL stock

by Research Dept.

Published on Apr 10, 2018 at 10:24 AM

Apparel stock Ralph Lauren Corp (NYSE:RL) last week bounced from the 60-day moving average, a trendline that's been very supportive since early February. Considering this, and the fact that the shares have been in a strong uptrend since last May, it appears to be a good time to bet on RL adding to its more than 38% year-over-year advance.

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Even after the stock's impressive multi-month rally, short interest remains very high on Ralph Lauren. However, short interest fell more than 11% in the last two reporting periods, and 12% of the float is still sold short. This suggests there's plenty of room for this short-covering trend to continue, which would help the equity on the charts.

The door is also wide open for future bull notes from analysts. As it stands now, there are 15 brokerage firms in coverage on RL, and just three of them see it as a "buy," compared to four "sell" or "strong sell" ratings.

As for options data, the security has a Schaeffer's Volatility Index (SVI) of 27%, which ranks below 86% of readings from the past year -- hinting at low volatility expectations at the moment for near-term options.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this RL 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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