Profit Pregame

There’s a Problem with the Next Big Potential Merger…

Air Travel Options Could Look a Lot Different This Year

An economic recovery in 2021 could spell big moves in the airline industry.

What’s happening?

With a number of industries still feeling a huge pinch from the COVID-19 pandemic, there’s a ton of speculation that we’ll see a wave of mergers and acquisitions this year.

The industry that is perhaps most likely to see at least one buyout is the airline business. With travel demand still at depressed levels, several smaller airlines may look to team up in an effort to consolidate costs and compete with the larger airlines as they recover from the pandemic.

A merger would also help airlines without a presence in major hubs break into new territories and expand market share.

Investors are taking a hard look at the most likely merger candidates and placing their bets.

Should you be doing the same?

Where’s the money?

There’s no doubt that a merger of two or more major airlines would cause some extreme price movements and make a bunch of money for those that predicted it correctly.

But there’s just too many potential headwinds and pitfalls to make an accurate guess.

Start with the fact that most of the balance sheets of smaller airlines are too much in the red to make the kind of substantial cash offer an acquisition of that size would require. And with stock prices so heavily depressed, adding in stock as part of the offer provides very little additional value.

So with so much uncertainty, you may be wondering if betting on an airline merger is a wise decision this year.

Here’s what I have to say…

How do I get some?

Don’t.

Look, in my opinion airlines would be crazy to merge when they have a potentially unlimited amount of money from the government. They can continue to lose money because the government will bail them out. So a merger, I wouldn’t say it’s impossible, but why do it?

Plus, with so much uncertainty, you might as well be throwing darts at a board.

What we do know is most likely to happen this year is a broad economic recovery as more and more of the population is inoculated against COVID-19 and further stimulus efforts are approved and implemented by the government.

So for now, until more details emerge, I’d stay out of the airline M&A game altogether. Instead, pick up shares of the SPDR S&P 500 ETF Trust (SPY) to profit from the broader market rising in the new year.

Sometimes, Patience is the Best Strategy. But…

Even though the profit potential of an airline merger sounds enticing, I’m going to wait until there are more concrete steps taken before I put my money there.

But if you’re anything like me, you also believe that waiting around on new opportunities can sometimes feel like an eternity…

What if I were to tell you about a brand new trading strategy developed by my colleague Tom Gentile that gets you in and out of a position in 60 minutes or less?

It might sound too good to be true, but you might be surprised to learn that some of his very best trades met that criteria.

He explains the full details right here.

In the Spotlight: Cannabis is Getting a Second Wind

As we look ahead to more of the big changes that could come our way in 2021, there are a ton of eyes on the cannabis industry.

It is widely expected that legislation to at very least decriminalize cannabis at the federal level will find its way to the floors of congress in the near future.

Even though loads of cannabis stocks are already seeing a huge move up, the opportunities are nearly limitless in this fledgling industry.

In the coming months, I’ll be sure to give you more intel on some of the hottest profit opportunities out there. Stay tuned.

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