ETFOptimize | High-performance ETF-based Investment Strategies

Quantitative strategies, Wall Street-caliber research, and insightful market analysis since 1998.


ETFOptimize | HOME
Close Window

A sudden volume spike in these 3 stocks could mean something big

Being a successful investor takes a lot of discipline, which is genuinely one of the deepest endeavors anyone can take on. Assuming you are not the average investor (you are here, so it's a safe assumption), you understand that a story without numbers is a fairytale and numbers without a story are a spreadsheet.

That's why MarketBeat does the homework to bring you both sides. Using tools like sorting stocks by their volume of recent shares traded can lead you into a goldmine of ideas. But you have places to be and goals to crush, so here's the time-saver version of your potential next moves.

With the VIX returning to its lowest levels since 2019, it is more important than ever to make sure you find yourself in action (whatever is left of it), which is why looking at names like American Airlines (NASDAQ: AAL), Tesla (NASDAQ: TSLA), and Norwegian Cruise Line (NYSE: NCLH) can be a good use of your time.

Numbers with a story

Anyone can spot the volume breakouts, well, anyone who follows MarketBeat, that is. However, knowing how to read doesn't get you paid; it is knowing how to use the information that counts. 

When it comes to airline stocks, there are only two names that should grab your NYSE: LUV" target="_blank" rel="noopener">attention. American Airlines is one of them, but Southwest Airlines (NYSE: LUV) is another for a completely different reason.

Southwest Airlines made it into the Goldman Sachs (NYSE: GS) conviction list, and its financials are genuinely beautiful compared to other names in the space. However, they term it an investment and no big buying spree ever came because markets expect to make money in 3-5 years; they want to get paid now.

American Airlines may be riding the tailwind of a bigger trend out there; you see, money also poured into Norwegian Cruise Line; catch the travel and leisure drift? According to the latest employment reports, around 40 thousand new jobs went to the industry, so there's got to be something there.

Could it have anything to do with oil prices plummeting from $90 a barrel to below $70 in the past quarter? Lower oil prices mean that both cruises and airlines just saw their margins boost significantly, drawing in a new wave of investment dollars.

Shares of American Airlines have rallied by more than 40.0% since they announced their quarterly results in October, and analysts indicate it could go a heck of a lot higher than that. For Norwegian, price action has also been kind, boosting the stock by roughly 52.0% in the same period.

With an earnings growth expectation of 89.6% for the next twelve months, Norwegian analysts say that the stock could be cheap relative to these projections, and markets are investing in the idea.

Now, Tesla may be a bit trickier, but rest assured it will also make sense in just a bit.

Unrefusable offer

Remember the conflicts that took over media headlines? The ones coming from the United Auto Workers (UAW) union. Their resolution ended with a 30-40% salary increase across the board for American car manufacturers like Ford Motor (NYSE: F) and General Motors (NYSE: GM)

These cost increases will only drive the bottom-line earnings lower and make their shares less valuable in the eyes of the market. Now, because Tesla counts on a highly automated and robotized manufacturing process, profits and margins for his pocket of the automotive sector are safe.

This would justify the volume rising to the top of the averages lately, as markets are only waiting for everyone else to realize what analysts already know: Earnings are set to grow by 23.4% in the next twelve months, giving due credit to its operational advantage.

Ford analysts took a cold heart to their projections, seeing a decline in earnings. General Motors also came to face the bitter reality, as they only saw a 2.8% growth rate, far from its former glory.

Okay, now that this one is out of the way, you should wake up to the possibility of this being a hedge situation against oil, too. If oil lowers, American Airlines and Norwegian Cruise are set to boom as spending and margins rise.

If oil rises, then Tesla cars will become even more attractive for their saving properties. The market works in mysterious ways, and this is one of them; follow the money, and you might find yourself with a double-digit upside and a hedged-out position against oil swings.

Stock Quote API & Stock News API supplied by www.cloudquote.io
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms Of Service.


 

IntelligentValue Home
Close Window

DISCLAIMER

All content herein is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy, nor should it be interpreted as a recommendation to buy, hold or sell (short or otherwise) any security.  All opinions, analyses, and information included herein are based on sources believed to be reliable, but no representation or warranty of any kind, expressed or implied, is made including but not limited to any representation or warranty concerning accuracy, completeness, correctness, timeliness or appropriateness. We undertake no obligation to update such opinions, analysis or information. You should independently verify all information contained on this website. Some information is based on analysis of past performance or hypothetical performance results, which have inherent limitations. We make no representation that any particular equity or strategy will or is likely to achieve profits or losses similar to those shown. Shareholders, employees, writers, contractors, and affiliates associated with ETFOptimize.com may have ownership positions in the securities that are mentioned. If you are not sure if ETFs, algorithmic investing, or a particular investment is right for you, you are urged to consult with a Registered Investment Advisor (RIA). Neither this website nor anyone associated with producing its content are Registered Investment Advisors, and no attempt is made herein to substitute for personalized, professional investment advice. Neither ETFOptimize.com, Global Alpha Investments, Inc., nor its employees, service providers, associates, or affiliates are responsible for any investment losses you may incur as a result of using the information provided herein. Remember that past investment returns may not be indicative of future returns.

Copyright © 1998-2017 ETFOptimize.com, a publication of Optimized Investments, Inc. All rights reserved.