A Rebounding Travel Stock for Bulls to Embark On

The security sports attractively priced premiums at the moment

Jan 27, 2021 at 1:36 PM
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Online travel specialist Expedia Group Inc (NASDAQ:EXPE) recently flagged into its 20-day moving average, as well as its $20 billion market cap. In addition, EXPE is retesting a breakout above its 2018 and 2019 highs. Now, the stock is up 20% year-over-year -- an area that could be supportive -- so it looks like the perfect time to bet on Expedia stock's next move higher.

Analysts, meanwhile, are hesitant toward the security. Of the 31 in coverage, just 12 sport a "buy" or better rating, with the rest saying "hold" or worse. Plus, the 12-month consensus price target of $127.96 is a 6.6% discount to current levels.

Short interest has rolled over from five-year highs and shorts are in covering mode. In fact, short interest is off 21.2% in the most recent reporting period, and the 13.05 million shares sold short represent a healthy 11.1% of the stock's available float

Lastly, premiums look attractive on EXPE at the moment, according to its Schaeffer's Volatility Index (SVI) of 52%. That ranks in the extremely low 12th percentile of its annual range. Our recommended call has a leverage ratio of 5.1, and will double in value on a rise of 19.6% in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this EXPE commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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