One of the least loved stocks on Wall Street surprised investors.
American Airlines, the S&P 500 stock with the highest selling and underperforming ratings, posted a less than expected loss in the last quarter. The shares had volatile swings on Thursday, up more than 30% at one point. His high overdraft interest attracted the attention of Reddit traders who target problematic names like GameStop and AMC.
Unloved stocks like American Airlines could see an even greater increase this year, said Gina Sanchez, CEO of Chantico Global and chief market strategist at Lido Advisors.
“We are looking at a recovery. This recovery may take some time, but I think most investors are really focused on that recovery and therefore investors are really starting to hunt for opportunities to put their money in less appreciated stocks that could benefit with a recovery in a scenario of rising tide-raises-all-boats, “Sanchez told CNBC’s” Trading Nation “on Thursday.
American Airlines came under pressure last year because the coronavirus pandemic prevented domestic and international travel. The stock has risen 119% since the May low, although it is still 41% below its peak in February.
“If you had to be demanding last year and be very specific about where you wanted exposure, next year you could really see the recovery helping broad sectors, and that’s where something really cheap like American Airlines or the consumer discretionary sector, like Bed Bath & Beyond … could benefit from a huge boost for the entire industry, “said Sanchez.
Bed, Bath & Beyond is also a highly sold stock with above average selling ratings: its 63% short stake also attracted Reddit investors and triggered a squeeze on the sale. The shares were up 89% this year as retail flows put short pressure on investors to cover their positions.
Katie Stockton, founder of Fairlead Strategies, agrees that American Airlines’ growth was driven by profits and retail involvement. She sees that this disruption continues, and is not the only company with a high number of sales reviews that she is supporting.
“Another example of an unloved action on Wall Street is Western Union … and this results in earnings with the same relatively oversold status,” said Stockton during the same interview. “It also has a type of side price action, a limited configuration that would give a good preparation for a break with resistance practically in line with current levels. So I think that was the type of configuration that was favored during this season earnings. “
Western Union, whose earnings report is expected for February 9, lagged behind the markets’ recovery – jumped 32% from April’s low, but remains 19% below February’s high. The action has six street sales ratings.
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