Kohl’s Stock Might Be a Bargain Right Now

Many retail stocks are in the red today, after Europe’s LVMH warned of a slowdown in Chinese demand. However, shares of department store Kohl’s (KSS) are bucking the trend, with the stock among the best of the S&P 500 Index today. What’s more, the security could be ready for the next leg of its longer-term rally, after flashing a recent technical signal.

At last check, KSS stock was up 2.7% to trade at $72.87. The shares have surrendered about 12% since touching an all-time high of $82.42 on Sept. 12, and are now within one standard deviation of their 160-day moving average, after a lengthy stretch above the trendline. Looking back three years, there have been three other times Kohl’s shares were in the same situation. After those signals, the equity was higher one week and one month later 100% of the time, averaging impressive gains of 4.3% and 15.24%, respectively, per data from Schaeffer’s Senior Quantitative Analyst Rocky White. Another 15.24% surge from current levels would place KSS just under $84 — and back in uncharted territory.

Should the security once again pop higher, there’s plenty of pessimism on Wall Street that could unwind to fuel additional gains. Currently, 11 of 18 analysts maintain tepid “hold” or “strong sell” opinions on the retailer, leaving the door open for potential upgrades to lure more buyers to the table.

Likewise, short interest represents a healthy 14% of Kohl’s total available float. At the stock’s average pace of trading, it would take about nine sessions for the bears to buy back their bets — plenty of fuel for a potential short squeeze.

Finally, traders wanting to speculate on KSS’ short-term trajectory should consider options. The stock’s Schaeffer’s Volatility Index (SVI) of 34% is in just the 12th percentile of its annual range, suggesting near-term options are priced to move at the moment.