Road to Recovery: Stock Hotlist for The Week of June 8th, 2020

Markets are already recovering very nicely.

After weeks of coronavirus fears that cost the economy millions of jobs, May 2020 saw an incredible increase in jobs.  In fact, non-farm payrolls increased by 2.5 million in May.  And the unemployment rate fell to 13.3%.  Meanwhile, Wall Street had expected a decline of 8.3 million jobs, and a jobless rate of at least 19.5%.

“Barring a second surge of Covid-19, the overall U.S. economy may have turned a corner, as evidenced by the surprise job gains today, even though it still remains to be seen exactly what the new normal will look like,” said Tony Bedikian, head of global markets at Citizens Bank, as quoted by CNBC.

  • Leisure and hospitality increased by 1.2 million in May after a loss of 7.5 million
  • Construction increased by 464,000 in May after losing 995,000 in April.
  • Education and health services jobs jumped by 424,000.
  • Retail jobs jumped by 368,000 after a loss of 2.3 million in April
  • Manufacturing jobs increased by 225,000.
  • Professional and business services rose by 127,000

That’s quite a recovery so far.  And there’s hope it’ll continue to improve.

While we wait to see what comes next, here are some of the top opportunities.

Opportunity No. 1 — MGM Resorts International (MGM)

With economies reopening, casinos will soon reopen for business, too.  Granted, casinos will have to operate at half capacity with some events not allowed just yet.  Still, the reopening means we could see a sizable recovery in these stocks battered by the coronavirus shutdowns.  With plenty of patience, we believe MGM could return to our initial target of $34 a share.  

Opportunity No. 2 – Delta Air Lines (DAL)

The worst of the shutdowns may now be over for airlines.  Already, we’re seeing a pickup in spending on hotels, restaurants, airlines, and other industries that took a hit on “stay at home” orders.  In addition, the Transportation Security Administration (TSA) data shows that travel demand is only rising.  For the week ended May 30, the number of travelers returned to 293,144 – the highest number since May 15.  

Opportunity No. 3 – United Airlines Holdings (UAL)

We like oversold shares of UAL for the same reasons we like DAL.  With plenty of patience, we believe the UAL stock could double from a current price of $32.17.  If the stock can break above double top resistance, we could see an initial test of $40 rather quickly.