Short Sellers Are Betting Against Spectrum Brands Stock but Its Chart Shows Strong Momentum: Who’s Right?

• Spectrum Brands (SPB) demonstrates strong technical momentum and is trading at a new 52-week high.
• Shares are up nearly 43% over the past year.
• SPB maintains a 100% “Buy” technical opinion from Barchart.
• Short interest at 11.19% is a notable risk, but recent upward earnings revisions and robust momentum support a constructive outlook.

Today’s Featured Stock

Valued at $1.97 billion, Spectrum Brands (SPB) is a global consumer products company. It offers a portfolio of leading brands in several categories like residential locksets, plumbing, electric shaving and grooming products, personal care products, small household appliances, specialty pet supplies, lawn and garden, and home pest control products and repellents. It markets its products through various trade channels, which include retailers, wholesalers and distributors, original equipment manufacturers, and construction companies.

What I’m Watching

I found today’s Chart of the Day by using Barchart’s powerful screening functions to sort for stocks with the highest technical buy signals; superior current momentum in both strength and direction; and a Trend Seeker “buy” signal. I then used Barchart’s Flipcharts feature to review the charts for consistent price appreciation. SPB checks those boxes. The Trend Seeker issued a new “Buy” signal on April 9. Since then, the stock has gained 6.47%.

Barchart Technical Indicators for Spectrum Brands

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

Spectrum Brands scored a 52-week high of $85.45 on April 20.

• Spectrum Brands has a Weighted Alpha of +53.88.
• SPB has a 100% “Buy” opinion from Barchart.
• The stock has gained 42.80% over the past 52 weeks.
• Spectrum Brands has its Trend Seeker “Buy” signal intact.
• The stock recently traded at $85.41 with a 50-day moving average of $76.61.
• SPB has made 10 new highs and gained 22.47% over the past month.
• Relative Strength Index (RSI) is at 72.28.
• There’s a technical support level around $84.40.

Don’t Forget the Fundamentals

• $1.97 billion market capitalization.
• 13.65x price-earnings ratio.
• 2.2% dividend yield.
• Analysts project an increase in revenue of 5.43% this year and another 5.12% next year.
• Earnings are estimated to decrease 5.80% this year but increase again by 5.15% next year.

Analyst and Investor Sentiment on Spectrum Brands

• The Wall Street analysts followed by Barchart give the stock 4 “Strong Buy,” 1 “Moderate Buy,” and 4 “Hold” opinions with price targets between $72 and $95.
• Value Line rates the stock “Above Average” with 3-5-year price targets between $90 and $135.
• CFRA’s MarketScope rates the stock a “Buy.”
• Morningstar thinks the stock is 20% undervalued with a fair value of $106.79.
• 5,300 investors are following the stock on Seeking Alpha, which rates it a “Hold.”
• Short interest is 11.19% of the float with 6.50 days to cover the float.

The Bottom Line on Spectrum Brands

In the last 90 days, there have been 6 upward earnings revisions and only 2 downward revisions. Momentum has been good, and even Morningstar thinks the stock has some more price appreciation left. My only concern is the 11.19% short interest as short sellers are normally more sophisticated investors.

Additional disclosure: The Barchart Chart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance.