One of November's worst performers could soon see a sustained comeback.
That was two traders' takeaway from a review of some of the month's biggest S&P 500 laggards, including but not limited to:
- Hanesbrands, down 10%
- Newmont, down 8%
- Regeneron, down 6.5%
- Danaher, down 5%
- Thermo Fisher Scientific, down 5%
- American Electric Power, down 5%
- Biogen, down 4%
- Clorox, down 3%
The above declines are as of Wednesday's close.
"Several of these turkeys ... have definitely violated uptrends in this last month, but there's one of them here that probably should be pardoned," Craig Johnson, senior technical research analyst at Piper Sandler, said Wednesday on CNBC's "Trading Nation."
He cited a chart of clothing maker Hanesbrands' stock, which he said recently reversed a downtrend that stemmed from its 2015 highs.
"Note that the stock pulled right back — predictably — to its 200-day moving average, has rallied off of it, and the 50-day moving average has started to cross back above the 200-day moving average," Johnson said.
That points to the start of an uptrend that could take Hanesbrands shares back to highs not seen since last year, the analyst said.
"[It] looks like, to us, we could see perhaps a move back to the high teens, which could give you about 30% upside," Johnson said. "So, it doesn't look like this is one for the stuffing quite yet. This looks like one that we should be buying at this point in time. Put a little bit more on the plate — and a little more gravy."
Gina Sanchez, founder and CEO of Chantico Global and chief market strategist at Lido Advisors, also saw potential in Hanesbrands.
"This is one that we covered when we looked at the most shorted stocks by hedge fund players," she said in the same "Trading Nation" interview.
The overarching short selling thesis was built on three pillars, Sanchez said: encroaching competition in underwear and activewear; Hanesbrands' high operating leverage tied to owning its manufacturing facilities; and the Covid-19 pandemic slamming brick and mortar, a key distribution channel.
"What they didn't plan on was that Hanesbrands managed to grab a government contract to make personal protective gear," the CEO said. "Now, they are able to take what was a big liability — their manufacturing facilities — and turn it into a huge positive."
That venture has helped Hanesbrands rake in "a tidy profit of over $750 million," Sanchez said, acknowledging that "going forward, they're expecting that PPE business to fall" to around $150 million.
But with most investors looking ahead to an eventual economic recovery, Hanesbrands may not need that revenue stream for long, she said.
"I think much of their business is going to perk back up as the economy reopens and it's cheap and it pays a good dividend that's quite sustainable," she said. "So, there's a reason to own this stock."
Hanesbrands shares ended trading Wednesday down more than 2% at $14.50.
The S&P and Dow slid on lower-than-usual trading volumes as Wall Street digested disappointing jobless claims data ahead of the Thanksgiving market holiday. They are up 11% and nearly 13% in November, respectively.
Disclosure: Piper Sandler will buy and sell securities on a principal basis for Danaher.