I have been watching Vocus for months and my conviction levels have continued to grow that the market is going to be significantly surprised to the upside, later this month when results are released. Having seen a number of these situations over the years, to me this is shaping up as the contrarian trade of the year.
Why Vocus will rally hard on results:
1. Sentiment to both the stock and the sector in recent months has been terrible
2. Institutional positioning is significantly light (no professional funds have filed any new significant ownership, nor even commented positively about the stock)
3. Short interest levels are bordering on extremes relative to daily liquidity and market capitalization
4. Recent share price declines have skewed the risks to the upside even before results are announced
5. Investors have simply continued to extrapolate the last negative results with little regard to valuation support
Ultimately the share price is currently priced for such a negative surprise, that even a poor result could still see prices rally aggressively.
The contrarian trade of the year
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