The Airlines, Oils, Builders And Hospitality Stocks Are Back In Play

Jun. 11, 2020 11:57 AM ETAZUL, KBH, LEN, LEN.B, LUV, NCLH, OIS, OKE, PK, ROCC, SAVE, SP, SPR, TOL62 Comments

2.66K Followers

Summary

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.

Airlines

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

Homebuilders

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

Hospitality

Park Hotels (PK) $11 on 6.11.2020

Cruise Lines

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

John Gilluly

2.66K Followers

I have invested for 33 years. I only write articles for Seeking Alpha when I think that there is something timely to invest in. I look for opportunities in mispriced assets that are temporarily out of favor. These investments can be very short term to long term, depending on the primary trend of the market. ***Sentiment indicators factor significantly into my choices. I combine them with simple technical studies before I trade. The entry-point, its original trade date and time, has an enormous effect on the efficacy of an investment over time. ***I have found that determining and following the primary trend of the market (in all time frames) is the key to successful investing: to be bullish when it is time to be bullish, and bearish when it is time to be bearish. ***Fundamental analysis may be good training for the mind in assessing worthy companies, but it is not the primary reason that investors buy and sell stocks. ***Like captains who steer their boats across the waves of the sea, wise investors carefully observe the movements in the water beneath them. A favorable trend can literally pull you along.***In commenting on such timeliness, Shakespeare once wrote, "There is a tide in the affairs of men, Which (when) taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat. And we must take the current when it serves, or lose our ventures."

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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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