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3 Stocks to Watch From the Unusual Options Volume Screener

Barchart - Wed Feb 8, 9:00AM CST
Bull & Bear - iStock-1015828796

Following a rough time in 2022, the benchmark S&P 500 got off to an auspicious start in the new year, gaining nearly 9% of market value on the eve of the midweek session. However, investors tuned into Tuesday’s State of the Union address, looking for clues as to how the Biden administration will respond to certain pressing challenges.

On the surface, several key indicators – such as surprisingly low unemployment – imply that the economy is on a recovery trek. Still, mass layoffs in the technology sector contradict such a notion. Further, a rising labor market would also imply more dollars chasing after fewer goods. That would exacerbate inflation, not ameliorate it.

Plus, with politics being so dynamic these days, it’s difficult to make sense of the proceedings. Instead, investors may want to look to developments regarding unusual stock options volume. According to Barchart, this list shows the difference between the current volume and the average volume over the past month, highlighting unusual activity.

Below are three companies that investors should pay close attention to.

TotalEnergies (TTE)

First up on this list is TotalEnergies (TTE), a European multinational integrated energy and petroleum company. Following the close of the Feb. 7 session, volume for TTE hit 12,343 contracts against an open interest reading of 42,454. In terms of the difference between the current session volume and the one-month average volume, the delta came out to 497.43%. Call volume reached 11,673 contracts versus put volume of 670.

Fundamentally, TTE should do well in large part because of China. While global investors largely celebrated China’s economic reopening recently, it did come with a potential cost: greater activity translates to more resource consumption, accelerating global inflation dynamics. Indeed, contributor Rich Asplund stated that crude oil prices jumped ahead of the State of the Union address due to Chinese energy demand optimism.

As well, astute retail investors might consider TTE a great deal. Currently, the market prices shares at a forward multiple of 5.55. As a discount to earnings, TotalEnergies ranks better than 65.44% of the competition.

Six Flags Entertainment (SIX)

A popular theme park, Six Flags Entertainment (SIX) is attempting to make up for lost time. In the year so far, SIX gained nearly 19% of equity value. Following the close of the Tuesday session, volume for SIX hit 8,168 contracts against an open interest reading of 26,943. The delta between the Feb. 7 session volume and the one-month average volume came out to 590.45%. Call volume reached 7,999 contracts against put volume of 169.

Rising bullish interest is a welcome change of pace for Six Flags. In the trailing year, shares stumbled more than 32%. However, SIX could also be responding to the robust labor market (at least for the non-tech portion). As consumers’ fears about losing their jobs fade into the background, they’re more willing to spend on discretionary services such as theme park attendance.

Sure enough, SIX also represents a good deal for discount-seeking investors. Currently, the market prices SIX at a forward multiple of 17.31. As a discount to earnings, Six Flags ranks better than 62.69% of sector rivals.

Hertz Global (HTZ)

Formerly a poster child of the initial disaster of the COVID-19 pandemic, Hertz Global (HTZ) has exerted much effort to win back shareholder trust following its bankruptcy. At the conclusion of Tuesday’s session, volume for HTZ options hit 30,168 contracts against an open interest reading of 131,399. The delta between the Feb. 7 session volume and the one-month average volume came out to 411.76%. Call volume reached 24,998 contracts while put volume sat at 5,170.

Fundamentally, the return of business travel may bode very well for HTZ stock. Likely, with employers recognizing that several white-collar workers are being laid off, they’re more willing to push for a return to the office. Logically, then, in-person interactions stand poised to be the rule rather than the exception. Over time, this circumstance may translate to a pre-pandemic staple: traveling to bolster relations and secure new deals.

To be sure, Hertz presents a far more fiscally challenged profile than the other highlights of unusual stock options volume. Still, the market prices HTZ at a trailing multiple of 10.8. As a discount to earnings, Hertz ranks better than 74.36% of sector peers. As well, the company trades at a sales multiple of 0.53, coming in favorably lower than the industry median of 1.15.

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On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.