The travel industry is gaining ground.
Large stocks of cruise lines, hotels, and airlines were some of the top performers in the world S&P 500 On Tuesday, the recent uptrend in a group was still struggling back to pre-pandemic levels.
Although cruise lines still have significant debt loads, two of their stocks could be considered for trading, Danielle Shay, director of options at Simpler Trading, told CNBC on Tuesday “Trading nation.”
“We’ll see cruise ships start sailing again,” Shay said. “The cruise lines are still down, which means you still have an advantage.”
Royal Caribbean, Carnival and Norwegian Cruise are 33%, 44% and 47% respectively below their pre-Covid highs as of January 2020.
“I think you have an uptrend of $ 30 to $ 40 in both the Norwegian and Royal Caribbean, and at-the-money call options are cheap on these in particular,” Shay said.
She suggested looking out for the LEAP call options for both stocks in January 2022 or January 2023. Long Term Equity Anticipation Securities (LEAP) options can be used by longer term traders as a substitute for buying shares in a stock.
“You have a cheap option there, and if you trade it to get the stock up to pre-pandemic levels, you have some upside potential there,” Shay said.
Federated Hermes’ Steve Chiavarone said in the same “Trading Nation” interview that US consumers are full of savings – $ 3 trillion more than a year ago.
“We’ve been locked in our homes staring at screens for almost a year. The answer to what we like on this subject is this: it’s airlines, it’s casinos, it’s cruise lines, it’s restaurants. It really is the whole bunch of them, “said Chiavarone, portfolio manager, equity strategist and vice president of his firm.
However, active management is the key to success here, said Chiavarone.
“With pricing pressures and manpower bottlenecks, you really want to make careful stock picking here,” he said. “Buy companies with good balance sheets, efficiency, pricing power so that they can benefit and gain shares in the rising price environment.”