Tapestry Stock Still Has Bullish Momentum After 52-Week High

A buyback plan, bullish technical pattern, and fading short interest signal high upside

Jan 3, 2025 at 10:06 AM

Subscribers to Schaeffer's Weekend Trader options recommendation service received this TPR 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.

Retail parent Tapestry Inc (NYSE:TPR) is seeing a breakout above its early December high to a fresh 52-week peak. The stock appeared on two bullish screens pulled by Schaeffer’s Senior Quantitative Analyst Rocky White. Firstly, TPR just broke above its top Bollinger Band, which has yielded strong historical returns. Secondly, it’s recent peak comes amid low implied volatility (IV), which has occurred five other times in the past three years, after which the equity was higher one month later 80% of the time with an average 9.4% gain.

Tapestry also just revealed a $2 billion accelerated buyback plan, after merger talks fell through with peer Capri Holdings (CPRI). Although 3.85% short-interest float isn’t extremely high, short interest has been in a decline and that figure leaves room for more covering, which could be a tailwind for the stock.

TPR Chart January 32025

Tapestry stock is also on the heels of its reveal of a $2 billion accelerated buyback plan, after said merger talks failed. Short interest is moving toward multi-year highs for the security. Of the 22.63 million shares, currently 9.8% of the stock’s total available float is sold short.

Our recommended call has a leverage ratio of 6.8 and will double on a 14.7% rise in the underlying security.

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