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Even as restaurants, bars, concert arenas and theatres gradually reopen, it’s not clear customers will flock to them anytime soon. Fear of the virus is still too great and the threat of a second-wave of infections coming later this year is significant. Jim and Scott revisit UBER as the lack of travel by consumers spells trouble for the gig economy.
A slow economic recovery from the pandemic-related recession along with deflationary factors such as higher savings rates, slowing population growth and excessive debt loads are all headwinds for higher oil prices. Jim and Scott target this oil producer as the best way to profit as the combination of weak demand for oil and a large debt load will send its stock price plummeting.
Few industries were harder hit than the movie industry when the full-force of the pandemic hit the United States. The great danger for theatre operators is that audience behavior has changed in such a way that audiences will not return even when a broader reopening is allowed. Jim and Dan target the world’s largest movie theatre operator as new viewing habits will prevent a return to normal for theatres now and in the future.
AAL’s earnings report was as bearish as we expected. AAL will underperform peers in 2022 if investors recognize that the strategy management is pursuing will deliver more value for creditors and employees than shareholders. For now, we have a stock that’s close enough to the lower $17 strike in our put spread to exit today at a nice gain.
Based on overnight futures trading, it looks like a reversal of the March rally is underway. There is more downside risk in many consumer discretionary stocks like SBUX. But Starbucks’ decline is more about company-level challenges than it is about macro risk. Our $80 price target for June is now within reach – much faster than we expected. So, let’s take profits now on this position.
The pandemic and overall volatile environment has slowed the U.S. economy down to depression-level output. With unemployment rates in the double-digits, many consumers have been on a spending strike as bankruptcies pile up. Jim and Scott target one big-box retailer that is vulnerable to the current state of too much inventory and not enough demand that will put pressure on its stock price in the coming weeks.
