Profit Pregame

Why You Should Hit Pause on Making Big Travel Stock Bets

With more than 40% of the U.S. population having received at least one dose of a COVID-19 vaccine, efforts to move past the pandemic seem to be going very well.

And that can make it easy for many to overlook the struggles that are taking place elsewhere.

As investors, it could be leading us to jumping into trades prematurely.

While optimism is running high among investors for a big rebound in the travel business, there are still a number of headwinds working against the industry.

So as investors begin to pile into these stocks with dollar signs in their eyes, it’s important to understand what’s really happening in the industry.

Domestic travel is starting to pick up with the success of the U.S. vaccine rollout, but many countries are still hesitant to allow foreign tourists. Currently, 113 countries are still limiting foreign travel for non-essential purposes.

Booking Holdings Inc. (BKNG) CEO Glenn Fogel recently put a damper on travel recovery hopes by stated that, “It’s still going to be years before we are fully recovered.”

Fogel also added, “International travel is where we make a lot of money, and it really very important for the whole industry.”

So, until international travel is able to resume on a much wider scale, investors should lower their expectations for big moves from airline, hotel, and other leisure stocks – at least in the near future.

But rest assured that I’ve got my eye on the travel industry for some potentially huge profits as the world continues to recover from the pandemic.

Trading tip of the week

Before earnings, a lot of times I will take off open positions.

The reason for that is that implied volatility gets crushed. I am looking to trade unusual options activity for trades, but not because of earnings.

Earnings report to watch

YETI Holdings, Inc. (YETI) is a name I’ve been seeing on my scanners a lot recently.

In fact, my Super Options subscribers had the chance to score a 115% profit on YETI calls in April, and we jumped back into another trade on YETI last Thursday.

As the weather heats up, demand is expected to pick up for YETI’s products.

Expectations are running high for YETI’s earnings report on Thursday. Revenue is expected to have grown 26.3% from the year-ago quarter, and EPS is estimated to have grown 90.9% year-over-year.

I’ll be very interested to see if YETI has experienced heightened sales in the first quarter, as well as any outlook it provides for the upcoming quarter.

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