The Airlines, Oils, Builders And Hospitality Stocks Are Back In Play
- Second wave virus fears are clobbering "Recovery Stocks" this morning.
- Several names have dropped 30-40% in 3 days.
- You will want to own these names at the end of the month for window-dressing.
- NAHB Housing Index, Housing Starts, New Home Sales, Mortgage Applications all come out next week, and they will be GREAT!
A week ago, I wrote an article opining that a pullback, a retreat, from a sudden run-up in Recovery Stocks would soon be upon us, but I did not expect something this dramatic, this soon.
All of the stocks in the charts below are buys this morning. I would hold them all until they break above their recent highs (June 3-8, 2020).
If you notice the RSI reading (relative strength) on most of these charts, it is angling down to another baseline over the next couple of days. The stocks are setting up for a recovery next week into what's called window-dressing, that time at the end-of-quarter [Q1)] where brokerages like to buy and display the winners of the preceding 3 months.
Homebuilder data has been especially strong, beginning with May's numbers. I fully expect June to continue that trend. You can review all Homebuilder Data here. I am expecting the NAHB Housing Index, Housing Starts, New Home Sales, and Mortgage Applications to beat expectations next week.
The bears will come out of the woodwork claiming the longed-for-leg-down is finally upon us, and fear will sweep through these names. But in actuality, stock prices are in a push me-pull you between the optimists on opening up the economy, and the pessimists on the folderol of it all.
The market will breathe in and out based on this pendulum pull of back and forth.
A couple of young economic forecasters from CITI said it best yesterday:
"A variety of higher frequency data and anecdotal reports are pointing to a rapid return to a level of activity much closer to (if still below) normal. It is not that we are overly optimistic on the prospects for the U.S. economy, just that we are much more optimistic than the extreme pessimism that until recently had become the accepted wisdom,” (See: The Expansion is Gaining Momentum but Still Needs a Lifeline from Congress and the Fed, says May’s best forecaster[s] Andrew Hollenhorst and Veronica Clark, June 10. 2020, Citi Research. CITI Research)
There is also this report out from Beaconomics in California. See: The Post COVID-19 Economy: A Case for the “V,” By Christopher Thornberg, April 28, 2020)
The data on airline traffic at TSA is steadily rising. It has doubled each month since its lows on April 21, 2020.
Spirit Airlines (SAVE) $16.06 on 6.11.2020
Southwest Airlines (LUV) $32.81 on 6.11.2020
AZUL S.A (AZUL) $11.15 on 6.11.2020
Spirit AeroSystems (SPR) $26.25 on 6.11.2020
SP Plus (SP) Airport Pkg, $22 on 6.11.2020
Lennar (LEN) $60.15 on 6.11.2020
Toll Brothers (TOL) $32.01 on 6.11.2020
KB Home (KBH) $31.50 on 6.11.2020 Brookfield Property Partners (BPY) $11 on 6.11.2020
Oil and Gas
Oneok (OKE) $37 on 6.11.2020
Oil States International (OIS) $5.10 on 6.11.2020
Penn Virginia Corp. (PVAC) $10.00 on 6.11.2020
Park Hotels (PK) $11 on 6.11.2020
Norwegian Cruise Lines Holdings (NCLH) $16.51 on 6.11.2020
Article submitted on June 11, 2020 at (9:40 AM EDT)
This article was written by
Analyst’s Disclosure: I am/we are long KBH, SAVE, AZUL, OIS, OKE, LUV, PK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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