Buy This Apple Supplier Next Week
Memorial Day weekend is right around the corner, and Schaeffer's Senior Quantitative Analyst Rocky White already gave us the best day to buy stocks during the holiday-shortened week. But what about the best-performing stocks on the S&P 500 for next week? That would be Apple supplier Broadcom Inc (NASDAQ:AVGO), boasting particularly impressive Memorial Day week returns in the last 10 years, according to White's data.
More specifically, looking back over the last decade, Broadcom stock boasts an average Memorial Day week return of 2.6%, with seven out of 10 returns positive. That may not seem like a lot, but it's almost double the second-best return on the list at 1.4% and handily legs out the next-best semiconductor stock, Xilinx (XLNX), at 0.6%.
Breaking down AVGO even more, the chip stock careened to a nearly four-year bottom of $155.67 on March 18, but since then has tacked on 80%. However, the shares have run into a stiff ceiling at their at their 200-day moving average, an area that roughly coincides with the $280 level. From Broadcom's current perch at $279.45, a similar 2.6% pop occur next week that would put the security past that trendline and at its highest point since late February.
The options pits have been placing an emphasis on calls. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AVGO sports a 10-day call/put volume ratio of 2.07. So not only do calls outnumber puts by a more than two-to-one ratio, that ratio sits higher than 81% of all other readings from the last year, indicating such a call skew is rare.
Now certainly looks like an attractive time to speculate on Broadcom's next move with options. The equity's Schaeffer's Volatility Index (SVI) of 44% sits in the 22nd percentile of its annual range. This means the options market is pricing in relatively low volatility expectations at the moment.
