We all want to make money in the stock market.
Otherwise, why would you be here?
That’s why we dove through our TrackstarIQ data to find three amazing ideas for you.
Each of these stocks contains both fundamental and technical reasons to move higher.
You remember yesterday’s discussion about short floats?
Well, now you’re about to see how to apply those principles.
Now, you’ll get a chance to read about the first two today.
And the first up on the docket is…
Penn National Gaming (PENN)
Sometimes, you got to get your gamble on.
And Penn National Gaming plays into that and our love of sports.
The casino operator runs 43 casinos and racetracks across the U.S. and Canada, many under the Hollywood Casino brand.
Covid wiped the floor with Penn’s revenues, cutting them nearly in half for 2020.
Initially, the stock crashed with the rest of the market. But by the end of the year, you could have confused them with Tesla.
From their low in March of $3.75, shares recently topped out at $142, an increase of 3,686.67%.
So what’s the big deal?
In February of 2020, the company took a 36% stake in Barstool Sports for $163 million. Not only did this garner a wildly loyal customer base, but it led to an online sports betting app in Michigan the following year.
From a valuation standpoint, the company is priced for growth. At best, their price to earnings ratio (P/E) is running about 35x. At worst, closer to 100x.
That’s compared to just a few years ago when they were around 12x.
But the more interesting story comes from the TrackstarIQ Data and technical factors.
You can see how interest in the stock grew through March and recently spiked in April. There was some news, but not enough that would have led to this sort of move.
The second key piece of information is the short float.
Right now, the stock has a 7.9% short float. That’s high, though not astronomical. And when we look at the stock’s daily chart, we can see that the $100 price level acts as an inflection point.
Our hot take – The $100 price level provides a good spot to trade against. If the stock starts closing multiple days and/or weeks below that point, it’s likely to head lower.
Norwegian Cruise Lines (NCLH)
Lots of headlines came out recently about the cruise industry. Companies want to sail while governments aren’t keen to let them.
Norweigian wants the CDC to let vaccinated passengers cruise as early as July. That presents interesting problems considering Florida just banned vaccine passports, and that happens to be one of Norwegian’s largest points of origin.
It’s not worth discussing their profits because…well there aren’t any. We do know that demand for bookings is through the roof as people long to get that vacation finally.
Currently, shares trade near $30, half what they were in 2019. And the chart isn’t anything notable.
But this stock does have a higher short float at 13.7%.
And we’ve recently seen pageviews tick up for both retail and advisor segments.
Our hot take – The company had to double its long-term debt to survive the pandemic. That will keep them from getting back to the all-time highs soon.
However, there’s still a ton of upside potential in the coming months as news trickles out of port reopenings.
Stitch Fix (SFIX)
In full disclosure, one of our staff gets his clothing solely from Stitch Fix these days (and t-shirt cannons).
This trendy company assigns you a personal shopper to send you a box of 5 clothing and accessory items on a monthly, quarterly, semiannual, or one-time basis.
Fun fact – if you buy all five items you get 20% off the total purchase price – according to our well-dressed colleague.
Shares tell an even trendier story (pun intended). From their low of $10.90 in April 2020 to their high of $113.76 by January.
Since then, the stock has pulled back hard, bottoming out recently at $44.05.
While the personal shopper via mail service turned a profit in 2019, they spent more on sales and general administrative expenses in 2020. Part of that was to keep their breakneck +20% revenue growth rate going.
But what led to the stock run was nothing more than a short-squeeze. At one point, shares had a near 70% short float.
While much lower now at 15.8%, it’s still fairly high.
What’s interesting is how the chart technicals lined up with our TrackstarIQ data.
You can see on this daily chart how shares found support at the 200-period simple moving average – a common tool used by traders and investors.
Around that same time, we saw a trend of declining interest reverse itself in our TrackstarIQ data.
By itself, this wouldn’t be much. But taken together with the chart and short float, it creates an interesting opportunity.
Our hot take – If you like this stock for a trade or investment, you can use the 200-period moving average as your stop-loss area. That means you would exit your position if the stock starts closing multiple days below the 200-period moving average.
