Smaller-Than-Expected Losses Point to a Post-Pandemic Trading Strategy

Some companies are still seeing sales and revenues below their 2019 pre-Covid peak. For these firms, changes in how we live and travel continue to impact their returns. And when it comes to how their stocks perform, it comes down to now how much a company loses, but whether or not it’s more or less than expected.

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  • That’s the case with United Airlines (UAL). The major carrier reported a smaller-than-expected loss in its most recent quarter.

    The carrier also reported that its top-line revenues are still down 32 percent compared to 2019. However, the company only lost $1.02 per share against expectations of $1.67.

    Shares have been trending down since peaking in March, when it became obvious that the Delta variant and changing travel trends would likely keep the airline stock from moving too much higher.

    Action to take: Given the heavily-related airline sector that gets to operate as an oligopoly, profitability will return in time.

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  • The company’s better-than-expected numbers point to a brighter future than the market is giving shares credit for right now. And buying shares here could get an unexpected boost if energy prices drop, given how the market is piling into that trade right now.

    Traders might want to look at the March $50 calls, which last went for around $3.35. However, look for the current short-term downtrend in shares to end first.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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