Penny stocks, no matter the sector, are typically highly volatile and usually give short-term gains. While this isn’t the case for all penny stocks, a day-to-day case study will usually yield more of these quick movers than long term investments. This year, however, we’re seeing a bit of a mixed bag so to speak.
There’ve been plenty of stocks that previously traded above $10 in some cases, now trading as penny stocks; thanks COVID. Herein could lie the opportunity, however. Many of these beaten-down names are trading at fractions of the valuation they were at in 2019. While many of them have gone on to recover from March lows, there are still plenty that’ve still got a lot of ground to make up.
We’ve discussed epicenter penny stocks before. These are companies that were hit the hardest by the pandemic. According to Fundstrat’s Tom Lee, they could also be the ones to recover the strongest in light of a vaccine timeline. Well, this month we started seeing this timeline with Europe stepping up to the plate first. Then, this week we saw former US presidents Barack Obama, George W. Bush, and Bill Clinton pledge to get vaccinated for coronavirus on television to promote the safety of the vaccine. With this continuation in optimism helping to boost market sentiment, the “reopening stocks” could be among the most interesting to watch right now.Looking For Travel Stocks To Buy?
This isn’t to say that all penny stocks in the “reopening” class are good to buy. But it is worth mentioning that optimism could be a driver for several of the sectors hit hardest by pandemic shutdowns and social distancing measures. In light of this, travel stocks have become a key focus for traders.Travel Penny Stocks To Watch
- Trivago (TVGO Stock Report)
- Liberty Trip Advisors Holdings (LTRPA Stock Report)
- Yatra Online (YTRA Stock Report)
While stocks like Southwest (LUV Stock Report), JetBlue (JBLU Stock Report), and even American Airlines (AAL Stock Report) have started showing signs of life, they are all still well-off their prior 2020 highs. So this begs the question, are there any travel stocks to buy under $5 right now? Let’s take a look at a few of these travel penny stocks and you can decide if they’re a fit.Travel Penny Stocks To Buy [or avoid]: Trivago
Hotel, Trivago, that’s how the tagline goes. The hotel portal that advertises finding the best rates has gotten hit hard by the pandemic. Though it was still a penny stock at the start of the year, TRVG stock dropped as much as 59% from its 2020 high after hitting lows of $1.25 last month. The mounting coronavirus cases and resulting lack of travel haven’t helped the booking company. What’s more, is this compounded the company’s loss in 2020. Specifically, in its most recent quarter, Trivago sales declined from €250.50 million last year to just €60 million during the same quarter in 2020.
This saw analysts like Wedbush slash price targets. In this case, the firm cut its $2 target to just $1.50 and maintained a Neutral rating on the company. Morgan Stanley, Mizuho, Citigroup, and SunTrust also cut their targets on the penny stock. Right now Wedbush carries the lowest target while SunTrust’s $2.30 is the highest target issued within the last year as of December.
However, the last few weeks have been strong for TRVG stock. Shares jumped from those 52-week lows to a current level above $2.05 this week. In fact, the penny stock reached a high of $2.26 on Thursday. It would appear that the recent move coincides with vaccine talks from the likes of Pfizer (PFE Stock Report), BioNTech (BNTX Stock Report), and Moderna (MRNA Stock Report).Travel Penny Stocks To Buy [or avoid]: Liberty Trip Advisors Holdings
You might remember Liberty Trip Advisors Holdings for its B shares. Earlier this year Liberty Trip Advisors B shares – LTRPB- went on a run of over 2,800% in a single day. The penny stock (now former penny stock) raced from just $4.51 to highs of $134 at its high on speculative trading. It has since come back down, however, it doesn’t change the fact that the company itself is in the spotlight, specifically the A shares.
The company offers online travel site services and online retail through its subsidiaries TripAdvisor and BuySeasons. Unless you’ve lived under a rock for “just a few years” you know that TripAdvisor is the largest online travel community. BuySeasons is an online retailer offering costumes and party supplies. The company has a presence in the United States, the United Kingdom, and other countries.
Not only is upbeat sentiment on travel stocks helping, data is also supporting a stronger trend. According to TripAdvisor’s 2020 Thanksgiving Travel Index, for instance, over half of Americans are still traveling during the holidays. What’s more is that 22% of people are also staying in a hotel or vacation rental to practice social distancing from friends and family. This all boils down to finding places to stay and information on locations; all of which TripAdvisors provides. Some of the fastest destinations recovering right now are the Florida Keys, as well as Scottsdale & Sedona, Arizona.
While stocks like TripAdvisor (TRIP Stock Report) and Liberty’s B shares trade well over $25, LTRPA stock still sits below that $5 threshold. It’s also been climbing for the better part of the last few weeks.Travel Penny Stocks To Buy [or avoid]: Yatra Online
Sticking with the travel trend, Yatra Online is an Indian consumer travel platform. It provides online travel agent services such as air ticketing, hotels, and package deals. Some of its applications include Yatra Mini, Yatra Web Check-In, Yatra Corporate, and Travelguru HomeStay. This month the company participates in the Benzinga Global Small Cap Conference on the 9th. CEO Dhruv Shringi will present.
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Furthermore, despite the lack of travel, Yatra’s latest earnings show some potential strength building up. “The domestic aviation market in India continued on its path of recovery with October 2020 passenger traffic up 33% from September 2020 levels, having recovered to 42% of October 2019 levels. This recovery in domestic travel led to a sequential quarterly growth of 60% in our Adjusted Revenue to INR 377.7 million (USD 5.1 million). This growth in revenue further combined with strong cost control enabled us to reduce our adjusted EBITDA loss sequentially from INR 309.4 million (USD 4.1 million) in the June 2020 quarter to INR 125.0 million (USD 1.7 million) in the September 2020 quarter,” said CEO & Co-Founder Dhruv Shringi
This week, YTRA stock continues trading higher after several catalysts. First, upbeat sentiment has helped, obviously. Second, analyst actions have helped spark additional interest. HC Wainwright initiated coverage on Yatra. The firm gave it a Buy rating. It also slapped a $3 target on YTRA stock.