Shares of unattended retail market payment and software provider Cantaloupe (CTLP) have shed nearly half their value in the past year. One trader is betting on a strong rebound in the coming months.
That’s based on the September $7.50 calls. With 141 days until expiration, 21,673 contracts traded compared to a prior open interest of 464, for a 47-fold rise in volume on the trade. The buyer of the calls paid $0.32 to get into the position.
Shares recently went for just over $5, so a move to $7.50 is about a 41 percent rally from here. The stock is close to a 52-week low in the low $5 range, and well off a 52-week high of $13.25.
The company hasn’t turned a profit in the past year, but revenue is up 33 percent, and there’s over $50 million in net cash on the company’s books, a sizeable amount of the stock’s total market cap.
Action to take: Shares look interesting as a rebound play, given the company’s niche business, oversold conditions, and strong cash position. A rebound is possible that could lead to sizeable growth, although investors won’t get paid to wait with a dividend.
For traders, the calls have plenty of time to play out and are inexpensive, so they’re worth a closer look for potential triple-digit returns from their current cost in the low $0.30 range.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.