2 Stocks to Watch Amid Royal Wedding Fever

Will this weekend's nuptials be a boon for travel stock TRIP?

May 18, 2018 at 2:10 PM
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Unless you've been living under a rock, you're probably aware that Britain's Prince Harry and American actress Meghan Markle are getting married at Windsor Castle this weekend. The couple's nuptials are expected to inject more than $1.4 billion into the U.K. economy, with much of that stemming from tourism -- a possible boon for travel stock TripAdvisor Inc (NASDAQ:TRIP). Meanwhile, Dunkin Donuts parent Dunkin Brands Group Inc (NASDAQ:DNKN) is giving a nod to the couple with a limited-time offering of the Royal Love Donut. And, perhaps more importantly, both TRIP and DNKN stocks have quietly muscled higher lately, and could attract more bulls.

Many people -- namely American anglophiles -- have paid big bucks to travel to England for the festivities. That could be good news for TripAdvisor. Earlier this month, the stock gapped higher on well-received earnings, and is now attempting to find support in the $46-$48 area -- a neighborhood that's acted as resistance in the past. TRIP shares were last seen trading around $48.25, up more than 57% in the past six months.

trip stock chart

A short squeeze could help TRIP extend its breakout, too. Short interest represents nearly 19% of the stock's total available float, or more than two weeks' worth of pent-up buying demand, at the security's average trading volume.

Plus, analysts have yet to capitulate. Despite TRIP stock's surge in 2018, just one analyst considers it worthy of a "buy" or better rating, compared to 22 brokerage firms maintaining tepid "hold" or worse recommendations. A round of upgrades could also lure more buyers to the table.

Will Dunkin make a killing on its Royal Love donut? Probably not, but the stock is still worth watching -- especially as there's plenty of room on the bullish bandwagon.

Dunkin Brands stock touched a record high of $68.45 in late January, before pulling back in the broader stock market correction. However, DNKN shares found support in the form of their 200-day moving average, and they've now added more than 15% in the past six months. At last check, Dunkin stock was fairly close to its all-time high -- and back in the black on a year-to-date basis -- docked at $65.82.

DNKN stock chart

As with TRIP, Dunkin stock has yet to convince the skeptics. Short interest grew 14.5% in the most recent reporting period, and now accounts for 14% of the stocks' float. At DNKN's average pace of trading, it would take almost two weeks to repurchase these pessimistic positions -- plenty of fuel for a short-covering rally.

Meanwhile, not even half of the 18 analysts following the breakfast concern deem it worthy of a "buy" endorsement. Upgrades in the wake of DNKN's recent rally could be a tailwind for the shares.

What's more, an unwinding of skepticism in the options pits could also be a boon for Dunkin. The stock's Schaeffer's put/call open interest ratio (SOIR) sits at 2.19 -- at the very top of its annual range. This indicates that near-term options traders haven't been more put-biased on DNKN in the past year.


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