Domino's Pizza stock has a history of impressive returns in September
Here at Schaeffer's, we ring in the start of every month by bringing you a list of stocks that have averaged the highest one-month returns over the past 10 years, courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name that showed up on September's list is Domino's Pizza, Inc. (NYSE:DPZ).
According to White's data, Domino's Pizza stock has enjoyed positive one-month returns after eight of these ten instances, averaging a 4% bounce during that time period. This makes DPZ the fourth-biggest gainer of the 25 stocks listed. A similar move from its current perch at $515.38 would put DPZ at the $536 level, pushing it back towards its July 22 record high of $548.72.
Several other technical levels could put wind at the equity's back, the most immediate being the 40-day moving average, which has helped guide DPZ higher over the past couple weeks. The $500 level could also serve as a floor for the pizza stock, as it captured a pullback late last week. For the year, DPZ boasts a 34.6% lead.
When we last looked at Domino's Pizza stock, it was noted that the equity could be ripe for a round of analyst upgrades. This still looks to be the case, with eight considering the equity a "buy" or better, versus 13 "hold" ratings. Plus, the 12-month consensus price target of $535.78 is still a slim 3.8% premium to current levels.
An unwinding of bearishness is the options pits could also give DPZ a boost. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock sports a 10-day put/call volume ratio of 1.44, which stands higher than 76% of readings from the past 12 months. This means puts are being picked up at a quicker-than-usual rate.
Echoing this, the security's Schaeffer's put/call open interest ratio of 1.24 sits in the 71st percentile of its annual range, implying short-term options traders have been more put-biased than usual.
Options traders are in luck, as these contracts can be had at a relative bargain at the moment. This is per DPZ's Schaeffer's Volatility Index (SVI) of 19%, which stands in the extremely low 2nd percentile of its 12-month range. In other words, options traders are pricing in low volatility expectations for Domino's Pizza stock right now.