🍨 Daily Scoop: Airlines Crunched The Numbers | Trade Stocks

Airlines Crunched The Numbers

By Wed, Mar 11, 2020

Hey Scoopers,

A more than 4% recovery across all three indices took the market out of the feared recessionary decline. But, it can be a dead cat bounce – more on that in the “Overall Market” section.

Beyond the overall market, airlines did some number-crunching and dug their stocks from the ditch while even face masks couldn’t save a not-so-well-managed company — more on that in the “What’s Up?” and “What’s Down?” sections.

Oh, by the way, what do you think Warren Buffett is investing in these days? We have a reckless prediction — more on that in the “Water Cooler” section.

But, first, here is a recap of what happened in the market yesterday:

Market Recap

  • U.S. markets: All three indices recovered nicely and finished Tuesday in the green zone. Scroll down to the “Overall Market” section to read more.
  • Cryptocurrency: Bitcoin’s price continued to fall. However, some experts believe the sell-off wasn’t in response to the stock market decline. Rather it was due to a large volume of Bitcoin being sold by an anonymous thief(s). It’s true, a thief or a group of them are selling their stolen Bitcoins without anyone stopping them.

 

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It Can Be A Dead Cat Bounce.

It seems that the oil price war shock is subsiding, and the market is going back to freak out about coronavirus. While all three indices managed to recover at least 4% on Tuesday from the sharp decline of Monday, the recovery can be a dead cat bounce.

Coronavirus is still spreading and not entirely under control around the world. It’s like a natural disaster. If a hurricane hits a region, the impact on the economy of that region will last for a while. The same goes for coronavirus. The implications for manufacturing, travel, tourism, and many other sectors will last long and will be reported by companies in the upcoming quarter earning reports.

Recovery starts when there is a significant reversal in the spread of the virus, or there is a specific treatment or vaccine available around the world. Until the cause of the trouble persists, there is a low probability that the market recovers.

 

We Crunched The Numbers.

So, what happened?

Shares of American Airlines (Ticker: AAL) were up more than 13% on Tuesday. The airline has been hit hard due to the disruption in global travel due to coronavirus. The rebound in the stock price is thanks to rival airline Unite (Ticker: UAL) who have been busy crunching numbers. In a conference on Tuesday, United announced that their numbers say the decline in traffic could take a year and a half to recover, but once it does, it will go back to normal. Investors like the nerdy number-crunching of United and start buying the airline stocks, American Airlines included.

Do investors like nerdy numbers? What a surprise …

 


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Masks Can’t Solve All Problems.

So, what happened?

Shares of Allied Healthcare Products (Ticker: AHPI) were down more than 22% on Tuesday. At some point last week, the stock was up more than 1000% since the beginning of the year. What’s the company selling? Hospital ventilators and respiratory devices, and what’s the new gold these days? Well, you guessed it, facemasks and hospital equipment needed for coronavirus patients. But, even the new gold status couldn’t mask the fact that the company hasn’t been profitable in the recent past, and sales had been on the fall before coronavirus. Also, traders felt the need to gain some of that 1000% risk off the table. We don’t blame them.

 

What’s Buffett Buying?

So what happened?

Warren Buffett has been sitting on a large sum of cash (billions and billions) for a chance to make an “elephant size” investment. However, Uncle Warren hasn’t been able to find good opportunities so far. But, who knows what has he been doing in the last few days. We have a reckless prediction.

What is Buffett buying?

Just for fun (not a recommendation to buy or sell), we predict Uncle Warren is loading up on Boeing (Ticker: BA). Here are the reasons:

  • A global duopoly,
  • 6 years of demand already booked,
  • Getting through its corporate crisis (Max 373 software issues)
  • The stock price is hit hard
  • Leadership (the board) is correcting the course of the company by making leadership changes,
  • And, the company’s business is clear and not hard to understand.

Again, this is just a prediction. What are you predicting Warren Buffett is buying these days to benefit from the price decline?

Disclosure: Authors of this Scoop own option contracts on Boeing (Ticker: BA).
About the Author

The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card