Q2 STOCKS TO BUY

Behind One Pot Stock's Big Drop

The "Rock 'n Play Sleeper" was recalled on reports of infant deaths

Apr 15, 2019 at 2:46 PM
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The U.S. stock market is trading lower today following the latest batch of big bank earnings. Among individual names making notable moves are cannabis name Aphria Inc (NYSE:APHA), toymaker Mattel Inc (NASDAQ:MAT), and casino concern Las Vegas Sands Corp. (NYSE:LVS). Here's a quick look at what's moving the shares of APHA, MAT, and LVS.

Aphria Stock Sinks on Dismal Results

The U.S.-listed shares of Aphria are down 13.7% at $8.72, after the Canada-based marijuana name swung to an unexpected loss in its fiscal third quarter. APHA also said it's accelerating the expiry of its Green Growth Brands bid. The stock has now lost a short-term foothold atop its 50-day moving average, but is testing support at its recently formed 80-day trendline. Year-to-date, the shares are still up 53%.

Short sellers are likely cheering today's drop, with the shares pacing for their worst day since Dec. 4. The 15.99 million APHA shares currently sold short represent a healthy 6.9% of the stock's available float, or 3.5 times the average daily pace of trading.

Mattel Stock Drops on "Rock 'n Play Sleeper" Recall

Mattel stock was down 2.4% earlier, after the toymaker recalled its Fischer-Price "Rock 'n Play Sleeper" products on reports of more than 30 infant deaths. A price-target cut from $14 from $15 is adding pressure, while Jefferies said a downward revision to MAT's full-year forecast may be in the cards, considering the product accounts for roughly 1% of the company's annual sales. More recently, MAT stock pared this loss to 1.7%, but remains 33.9% higher year-to-date.

In the options pits, short-term speculators have rarely been more put-skewed than they are now, per MAT's Schaeffer's put/call open interest ratio (SOIR) of 2.19, which ranks in the 88th annual percentile. This is due to peak open interest of 12,540 contracts at the April 12 put, where Trade-Alert points to mostly sell-to-open activity here back in late November when Mattel shares were trading near $12.90.

Macau Warning Weighs on Las Vegas Sands Stock

Casino stocks are trading lower today on speculation Macau gross gaming revenue for April may fall more than expected, with Jefferies analyst David Katz projecting a 10%-13% year-over-year drop versus a previous estimate for a decline of 10%-12%. Las Vegas Sands stock is down 0.5% at $66.56, but finding a foothold near $66 -- a level that served as a ceiling earlier this month.

Overall, it's been a strong year for Las Vegas Sands stock, with the shares up 27.8% so far in 2019. Options traders have been positioning for a downward move, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), LVS' 10-day put/call volume ratio of 1.01 ranks in the 71st annual percentile, meaning puts have been bought to open over calls at a quicker-than-usual clip.

 
 

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