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The Food Giant For Bullish Traders

Food distributor United Natural Foods (UNFI) has been on a rapid climb on the charts in 2020, making a quick recovery from the broader-market crash in March. In fact, in early May the equity surged to a more than one-year peak of $23.38. And although year-to-date UNFI sports an impressive 130% gain, the stock has pulled back to the $20 mark. Below we will take a look at why despite its recent retreat, now looks like the perfect time to bet on UNFI’s next leg higher.

According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, UNFI has come within one standard deviation of its 40-day moving average twice in the past three years. One month later, the equity was higher 100% of the time, averaging an impressive gain of 101.1%. Another surge of this magnitude from the security’s current perch of $20.45 would send the food name above $40 — territory not seen since July 2018.

An unwinding of bearish attention could also be a positive catalyst for bulls. Heading into today, all seven of the analysts following United Natural Foods stock sport a tepid “hold” recommendation.

Also of importance, options are looking attractive on United Natural Foods stock at the moment. This is per the security’s Schaeffer’s Volatility Index (SVI) of 79%, which stands higher than just 13% of all other readings during the past 12 months. In simpler terms, options players are pricing in relatively low volatility expectations at the moment.

Lastly, UNFI has seen a 20.6% surge in short interest during the past two reporting periods. The 10.17 million shares sold short now represent a notable 19.3% of the stock’s total available float. At the equity’s average pace of trading, it would take bears over four days to buy back their bearish bets.

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