Waste Management, Inc. (NYSE:WM) has been on a roll recently, stringing together an eyebrow-raising nine weekly wins, and up 26% year-over-year. But while a fourth-quarter revenue miss has shares of environmental services concern selling off today -- down 1.6% to trade at $123.50 at last check -- just one day after hitting an all-time high of $125.64, bulls shouldn't fret just yet. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, the pullback put WM right in line with a bullish trendline that could send WM even higher.
The trendline in question is the 20-day moving average, with White's modeling showing nine similar signals flashing in the last two years. After a month, 89% of these signals Waste Management was higher, and averaged a one-month return of 3.37%. A similar move from its current perch would push WM to fresh highs, right below the $128 region.
Although the stock's implied volatilities are high now, if the SVI holds steady around its two-year average over the next month, those wanting to bet on WM's next move should consider White's data showing that an in-the-money call option could potentially return 81% on another expected bounce off its 20-day trendline.
Despite the dip, calls are outnumbering puts today, with 4,206 of the former across the tape -- four times the intraday average. The most popular is the March 125 call, with 951 contracts exchanged so far, followed by the February 120 call. This preference for bullish bets isn't unusual though, in the last 10 days 5,366 calls were picked up, compared to just 581 puts.
Analysts have yet to chime in on Waste Management's quarterly report, but coming into today, analyst sentiment was split. Seven in coverage consider the stock a "buy" or better, while seven say "hold." Meanwhile, the consensus 12-month target price stands at $126.74, just a 2.7% premium to current levels.