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Over the past ten days, the Dow Jones (DJI) increased 30%. Nearly 16 million Americans have applied for unemployment, companies are losing billions, and the government is inflating the stock market. It's time investors take their money and run, or sell shares and start shorting. Here at financial movers, we're shorting. This is who's on our stock watchlist for the week.
As lockdowns continue and travel bans stay in place, don't expect the Marriott's revenue to go up.
“We’re now seeing revenue down 75% plus, probably I suspect nearing a 90% decline in the United States. And obviously at those levels there just isn’t any business in hotels,” said Marriott CEO Arnie Sorenson.
Last Thursday, shares of the company closed at $81.31. Shares gained 38% in less than a week since when they were priced at $58.88.
There's no reason for the increase in price, especially when the company's own CEO stated there's currently no business in hotels right now. Companies with quick gains can expect quick losses. Marriott is no exception and their stock should be seen as a great shorting opportunity.
Norwegian Cruise Line (NCLH)
We recently released an article urging financial movers to consider adding Carnival Cruise Line (CCL) to their portfolios. After the release of the article, CCL shares gained more than 50% over three trading days.
Carnival's share price rose after the Saudi Public Investment Fund announced they purchased over 8% of Carnival's shares.
After Carnival's price rose the rest of the cruising industry followed suit. Norwegian rode off Carnival's coat tails and Norwegian shares undeservingly gained 54% in less than a week. There are three reasons to short Norwegian this week:
Share prices are inflated. Anything that goes up, must come down. Shares can't sustain a 54% gain that occurs over five days. Share prices may not lose all 54%, but don't be surprised to see shares lose at least half of what they gained last week.
Norwegian is facing legal problems. On March 11, 2020, the Miami New Times published "Leaked Emails: Norwegian Pressures Sales Team to Lie About Coronavirus." Today, Pomerantz Law Firm has opened up an investigation on behalf of Norwegian shareholders. Between coronavirus and legal problems, financial movers aren't going to be investing in this sinking ship.
After coronavirus peaks and lockdowns are lifted, there's still a full blown economic crisis going on. 16 million people and counting have applied for unemployment since the beginning of March. Vacations aren't a necessity and won't be the first thing consumers start buying. Norwegian will suffer coronavirus side-effects for months after the virus peaks.
The economy is getting worse
Corporations are losing billions and the stock market had its best week in over 40 years. A recent Goldman Sachs (GS) survey found that 50% of small business owners don't believe their business will make it through the crisis. It doesn't make sense that the stock market is increasing while businesses are closing and people are losing their jobs.
When things seem a off, they probably are.
See you on the short side, financial movers.
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DISCLAIMER: This article does not contain financial advice. Any and all market analysis is solely the authors opinion.