Part 4

Delta Airlines, Inc. (DAL)

Company Background

The company also plays an important role within the XLI and has been a very attractive stock lately due to the coronavirus’ correction on the market. Delta Airlines is one of the biggest airline companies in the US and operates over 5,400 flights daily and serves around 330 destinations 52 countries on 6 continents. Delta was one of the biggest losers during the coronavirus sell-off in February-March. The reason for that was logical – the airports were blocked and flights were cancelled all around the world. Therefore, we saw a massive selling activity among investors in the mean time that led to a huge depreciation on the price, sending it from $60 in February to the lows at $20 in March (67% correction). However, ever since then the stock has been on the rise. It bottomed out from the $20 lows to reach the $44 highs in early December. In other words, investors saw the massive correction early this year as an amazing buying opportunity where they could own one of the leading airline companies in the US at almost 70% discount. It is important to mention that such corrections don’t happen very often and they represent amazing buying opportunities and that’s when smart money comes in.

Technical analysis & Overall financial performance

The share price has managed to break a few key resistances on the way up, such as the $35, $40 and $41. Now those broken resistances are the key support lines the price is expected to bounce from.

Moreover, the company has shown some improvement in its financial statements already. In other words, even though it missed analysts’ expectations in the 2nd quarter due to the severe hit its business took caused by the coronavirus earlier in the year, the company managed to deliver very decent earnings in the 3rd quarter and reported -$3.3 while analysts were expecting -$3.14 per share. Yet, in the 2nd quarter ending in June the loss was -$4.43 per share and that means the company’s financials have started improving and that’s an indication for the recovery we are all expecting in the future.

We remain strongly bullish on Delta and believe the recent correction that sent the stock from the $44 highs to the current $41.70 was mainly based on a profit-taking scenario after the huge bullish rally so far this year. In fact, DAL is up more than 100% so far since the market bottomed out in the 2nd part of March.

Therefore, we will be looking forward to a further correction on the price that would give us a chance to buy it at a decent support and maximize our followers’ profitability to the upside.

Chart: Delta Airlines, Inc. (DAL)

We will start buying the stock aggressively at the first key support mark at $40 where a lot of bullish interest is expected. Should the price drop further, we would be adding more to our buy positions at the next key support at $37.50 which would give us a chance to improve our average price and make more money to the upside.
Our first profit-taking area is at $43-$44, followed by the next target at $50-$52 where we would be fully cashing in our profits.

American Express (AXP)

Company Background

The company plays a key role for the overall performance of the ETF with its current 2.43% weight. American Express is a diversified financial services company that offers charge and credit card payment products, as well as travel-related services worldwide. In fact, the company has long ago become a global leader in the sector it operates. We have been analyzing AXP’s performance for a long time now. We must say the company’s financial performance for the past 5 years has been extremely strong. It has kept on growing its revenues and profits and making more money for its shareholders. We have actually been waiting for a long time to see such a great correction to the downside, which was now caused by the coronavirus pandemic.

Due to the massive sell-off all across the board back in February, AXP dropped from $138 to the lows at $67 in only 4 weeks. Ever since then though, the stock has been following the overall bullish sentiment on the market and the stock has been on the rise. It had risen towards $125 on the 4th of December, followed by a profit-taking correction that has sent the price towards the current strong support at $120. The candle for the week ending on the 11th of December clearly showed that the price has failed to break that key support mark to the downside and formed a bullish hammer just above the support, which in technical analysis is seen as an indication for a lack of further selling activity at the moment and a very likely reversal to the upside afterwards. The 50-day moving average stays at 117-118 and just below the support, further confirming a very likely bullish movement from that level. Moreover, the lower Bollinger band matches perfectly with the moving average and the strong support line at that point, giving more reasons to believe there will be another strong spike on the price in the near future. From a fundamental point of view, American Express did a good job in the past 2 quarters, beating analysts’ expectations for only $0.13 earnings per share in the 2nd quarter where American Express delivered $0.29 (123% better than expected) and also managed to deliver another $1.30 per share in the 3rd quarter of this year, almost matching the expectations for $1.39. In other words, the company’s financial performance has remained strong even during the coronavirus pandemic and that has been among the main reasons for the strong bullish rally on the stock in the past 9 months since the huge sell-off all across the globe in the end of February, ending on the 20th of March. Based on all above-stated factors, we are looking to add AXP to our portfolio.

Chart: American Express Co. (AXP)

We will start buying AXP stock aggressively at the $120 mark. In case of a drop below the support we would be looking to buy even more at the next key support at $110, which would give us a chance to get a better average price on the stock and further maximize our profitability to the upside. Our initial profit-taking area is at $125-$126, followed by the next target at $130-$135 where we would be fully cashing in our profits.


Sincerely,

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