Travel stocks could headline this week’s flood of earnings reports, two traders say.
The second-busiest week of earnings season will see companies across a host of industries release their quarterly results. Twenty-eight percent of the S&P 500 is scheduled to report.
Uber, Take-Two Interactive, Square, Eli Lilly, Beyond Meat, General Motors, Alibaba, Booking.com and DraftKings are just of the few names reporting.
One trader has his eye on Marriott International, which reports Tuesday before the bell.
“This is going to be a great clue as to how the reopening trade is really going and whether this delta variant is really starting to affect end-of-summer travel plans,” Piper Sandler’s senior technical research analyst Craig Johnson told CNBC’s “Trading Nation” on Friday.
The stock is in a position of strength heading into the report, Johnson added.
“You can see a lot of optimism is getting built in,” the chart analyst said. “You can see the nice downtrend reversal that has taken place. You can see how the shares have pulled right back to their 200-day moving average [and] really rallied right off of that.”
With the options market implying a 4% move higher or lower for the stock after earnings — it historically moves around 2.7% — the action could forecast what’s ahead for similar reopening trades, Johnson said.
“This is going to be a key stock to understand that reopening and [how] sentiment is changing with the delta variant and travelers,” he said.
Though earnings have come in well above expectations on several metrics, travel, entertainment and food stocks are still worth watching amid concerns around the delta variant, said Steve Chiavarone of Federated Hermes.
With the Centers for Disease Control and Prevention tightening mask guidance, “is that going to impact behavior or are consumers going to kind of push through that?” Chiavarone, a portfolio manager, equity strategist and vice president at his firm, said in the same “Trading Nation” interview.
“As we think about some of the guidance that’s coming from these companies in the next week, that’s what we’re going to be looking for very acutely,” he said.
He may also take advantage of pullbacks, should the opportunities present themselves.
“There could be a little weakness and we would look to buy that,” Chiavarone said. “I don’t know if we would do it right away, but we would certainly put those names on our buy list.”