2 Travel Stocks That Could Gobble Up Gains

Expedia Inc (NASDAQ:EXPE) and Alaska Air Group, Inc. (NYSE:ALK) could take off during Thanksgiving week

by Josh Selway

Published on Nov 18, 2015 at 11:48 AM

Travel stocks got rocked in the aftermath of Friday's terrorist attacks in Paris. Today, some airline names are struggling again amid renewed fears, following news that two Air France flights were diverted last night due to bomb threats, and that authorities raided a Paris neighborhood. However, it may not be all bad news for travel-related equities, as some could enjoy a Thanksgiving-time lift, should history repeat itself.

Specifically, Schaeffer's Senior Quantitative Analysts Rocky White passed along 30 stocks that tend to outperform around the holiday, and among them were booking site Expedia Inc (NASDAQ:EXPE) and airliner Alaska Air Group, Inc. (NYSE:ALK). Let's take a look at these stocks' technical and sentiment backdrops. 

On a long-term basis, EXPE has been dominant on the charts. The shares have steadily climbed throughout the year, reaching an all-time high of $140.51 earlier this month. The stock is up another 1.3% today at $122.51, after finding support on Tuesday at its 100-day moving average. 

The holiday could bring more technical success, too. Going back 10 years, EXPE has put in a positive performance during the Thanksgiving week 80% of the time, averaging a 4.1% gain. And if bearish option traders hit the exits, it could lead to even more upside. For instance, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 10-day put/call volume ratio of 1.88. Not only does this mean that put buying has nearly doubled call buying in recent weeks, but the ratio also outranks 78% of all similar readings from the past year. 

Expedia Inc could also benefit if shorts continue to throw in the towel. Short interest declined by over 6% during the two most recent reporting periods, but still accounts for almost 11% of EXPE's float. In other words, there's ample sideline cash available for a potential short-squeeze rally

ALK is slightly lower today with the airline sector, giving back 0.1% at $77.46. The shares have mostly been flying in circles between $72 and $81 since July, so shareholders are likely happy to see Thanksgiving approaching. The stock has averaged a 3.2% gain during the holiday week, and been positive 80% of the time. 

It'll be interesting to see if option traders shift their stance if the stock shoots up the charts like it has in the past. Alaska Air Group, Inc.'s Schaeffer's put/call open interest ratio (SOIR) stands at 1.42, meaning put open interest outweighs call open interest among stocks that expire in three months or less. Furthermore, this reading is only 11 percentage points from an annual high, signaling a stronger-than-usual preference for puts over calls

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