The Reason For Today’s 15.61% Strength in Arcos Dorados Holdings Inc. (ARCO) Shares

Arcos Dorados Holdings Inc. (NYSE:ARCO) is among the top gainers of the stock market today, skyrocketing 15.61% or (0.54 points) to $4 from its previous close of $3.46. Does this growth mean it the best stock to buy right now? The shares seem to have an active trading volume day with a reported 2550421 contracts so far this session. ARCO shares had a relatively better volume day versus average trading capacity of 722.96 thousand shares, but with a 0.12 billion float and a 7.79% run over a week, it’s definitely worth keeping an eye on. The one year price forecast for ARCO stock indicates that the average analyst price target is $9.8 per share. This means the stock has a potential increase of 145% from where the ARCO share price has been trading recently.

During the recent trading session for Arcos Dorados Holdings Inc. (NYSE:ARCO), the company witnessed their stock rise $0.6 over a week and tumble down $-2.62 from the price 20 days ago. When compared to their established 52-week high of $8.41, the high they recorded in their recent session happens to be higher. Their established 52-week high was attained by the company on 12/27/19. The recent low of $3.07 stood for a -52.41% since 03/19/20, a data which is good for most investors who are looking to take advantage of the stock’s recent rise. A beta of 1.77 is also allocated to the stock. Since the beta is greater than one, it implies that the stock is more volatile than the market, a data that traders are keeping close attention to.

Looking at the current readings for Arcos Dorados Holdings Inc., the two-week RSI stands at 36.96. This figure suggests that ARCO stock, for now, is neutral, meaning that the shares are stable in terms of price movement. The stochastic readings, on the other hand, based on the current ARCO readings is similarly very revealing as it has a stochastic reading of 17.62% at this stage. This figure means that ARCO share price today is being overbought.

Technical chart claims that Arcos Dorados Holdings Inc. (ARCO) would settle between $3.55/share to $3.64/share level. However, if the stock price goes below the $3.39 mark, then the market for Arcos Dorados Holdings Inc. becomes much weaker. If that happens, the stock price might even plunge as low as $3.32 for its downside target.

Analysts at BofA/Merrill raised their recommendation on shares of ARCO from Underperform to Buy in their opinion released on October 21. JP Morgan, analysts launched coverage of Arcos Dorados Holdings Inc. (NYSE:ARCO) stock with a Overweight recommendation, according to their flash note issued to investors on July 10. Analysts at BofA/Merrill lowered the stock to a Underperform call from its previous Buy recommendation, in a research note that dated back to January 22.

ARCO equity has an average rating of 2, with the figure leaning towards a bullish end. 6 analysts who tracked the company were contacted by Reuters. Amongst them, 1 rated the stock as a hold while the remaining 5 were split even though not equally. Some analysts rate the stock as a buy or a strong buy while no rated it as a sell. 5 analysts rated Arcos Dorados Holdings Inc. (NYSE:ARCO) as a buy or a strong buy while not a single analyst advised that investors should desist from purchasing the stock or sell them if they already own the company’s stock.

Moving on, ARCO stock price is currently trading at 6.99X forward 12-month Consensus EPS estimates, and its P/E ratio is 8.9 while for the average stock in the same group, the multiple is 21.4.