CBD Deal Sparks Major Upside for This Penny Stock

SQBG stock is pacing for its best day in three years

by Lillian Currens

Published on Feb 28, 2019 at 12:47 PM

The shares of Sequential Brands Group Inc (NASDAQ:SQBG) are soaring today, after the apparel and lifestyle concern announced it would be partnering with Canopy Growth (CGC) to develop a line of CBD-based products. Martha Stewart, whose consumer brand is owned by Sequential, was named as an advisor in developing the new line for animals and humans. SQBG is now up 30% at $1.55 -- pacing for its biggest one-day jump since February 2016 -- and options traders are rolling the dice on more upside. 

The stock hit a seven-year low of $0.67 on Dec. 27. Since then, however, SQBG shares have more than doubled, and are set to end atop their 200-day moving average for the first time since August.

The stock's typically quiet options pits are seeing heavy activity today, with more than 1,100 calls on the tape. Most of the action has transpired at the March 2.50 call, where it appears traders are buying the options to open. By doing so, they expect SQBG shares to topple $2.50 by the close on Friday, March 15, when front-month options expire. 

Analysts have been pretty quiet on the penny stock, with the three who do follow SQBG all maintaining "hold" positions. However, the consensus 12-month price target of $1.25 is now a nearly 20% discount to current levels. A round of upgrades and price-target hikes could lure more buyers to the table. 

An unwinding of short interest could boost Sequential Brands, too. The 3 million shares sold short currently represent 8.5% of the stock's available float, and would take over 62 sessions to cover, at SQBG's average daily volume.



a schaeffer's exclusive


We're celebrating 38 years with this FREE insider report!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

What's Next for the American Wealth Gap
Porter Stansberry is predicting a major change in the American economic system.
Weight-Loss Drug Data Lifts Vivus Stock Above 200-Day
One name is eyeing its biggest one-day percentage gain since last August
Analysts Grow Cautious on HPQ and FL Stocks Ahead of Earnings
Calls have remained popular on HPQ, however
IRA/401K Investment Guide: 2019 Stock Market Crash
Use gold to protect any IRA, 401(k), or retirement account from a looming financial crisis.