The travel stocks are in turmoil again.
Airlines, hotel and cruise stocks were sold on Monday when a new strain of Covid broke out in the UK and Europe, tightening travel restrictions.
Joule Financial President Quint Tatro told CNBC’s “Trading Nation” on Monday that it doesn’t make sense to jump into those names.
“I would be very, very patient. This is, in my opinion, a case where the ‘second mouse gets the cheese’. There’s no rush,” said Tatro. “I’m just not sure if an investor needs to try something this risky. All of a sudden you wake up and the next thing you know is that your stock is down 4% or 5%.”
Travel stocks were exposed to the whims of trading lockdown and reopening this year. The JETS Airline ETF, for example, has recovered almost 100% from its March lows but remains 32% below its January high.
“We like the hybrid approach,” said Tatro, naming Uber and Lyft as two of his favorite games. “These are names that will participate if travel continues to show up and people get off and do things.”
Those two should work in the case of locks too, he added. For example, Uber has grown its Uber Eats business while staying at home.
“That kills two birds with one stone and those are the areas we would prefer if we were to look at this room. Those are names that we are actively buying here,” said Tatro.
Nancy Tengler, chief investment officer at Laffer Tengler Investments, told Trading Nation that she prefers a pure game in the travel industry.
“Southwest makes 97% of its revenue domestically. They bought routes all year round, not just in the US, some in Mexico, but mostly on resort-style routes, and then they were the most efficient cost-cutting of any US carrier.” said Tengler on Monday.
Southwest Airlines has underperformed the market this year but has traded better than the rest of the airlines. The stock is down 15% in 2020, a smaller loss than the JETS ETF’s 30% decline.
“Add that while rising energy prices are affecting those of us who drive, jet fuel prices have actually come down due to a lack of demand,” she said. “So I think if you want to be an investor in the airlines and we do own them, I think this stock is exceptionally well positioned in the short term, maybe over the next six to nine months.”
Disclosure: Tatro and Joule hold LYFT and UBER. Tengler and Laffer Tengler Investments hold LUV.
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