A Ridiculous Crisis May Have Created an Unbelievable Opportunity

Dec 23, 2022

One of the best ways to spot potential opportunities is by tracking insiders.

After all, who knows the company better than an insider – the CEO, CFO, COO, officers, employees, and directors?  If they’re buying a sizable number of shares, it’s often a good idea to start looking into why and perhaps follow them into the stock. 

Look at oversold shares of United Airlines Holdings (UAL), for example.Over the last few days, the UAL stock dropped from about $46 to $38.01.  All thanks to a CPI report that showed U.S. air fares fell 3% from October to November, said CFRA analyst Colin Scarola, as noted by Yahoo Finance.

“However, the CPI airfare data has not historically been representative of UAL’s pricing trends. For example, the CPI data showed U.S. air fares fell 8% from Q2 to Q3, but UAL’s actual pricing was down just 1% Q/Q in Q3. Further, some moderation in air fares is to be expected given how much fuel prices have fallen recently, allowing airlines to charge less while increasing profitability. Notably, UAL forecasts a $3.61 average fuel price for Q4, but as of today, jet fuel prices are under $2.70 (-25% vs. forecast).”

In short, the crisis may have created an oversold opportunity.

For one, UAL is now oversold on RSI, MACD, and Williams’ %R.  Two, “Scarola added that the sell-off was overdone and reiterated a Buy rating on United’s stock. He also raised his earnings estimates on United for 2022, 2023, and 2024 and took the price target to $60 from $59,” as added by Yahoo Finance.  Three, analysts at Cowen just said, “United has the greatest exposure to the ongoing recovery in higher-margin international travel among U.S. airlines.”

Four, UAL director Edward Shapiro just bought 25,000 shares for about $995,000 at an average price of $39.79.  The last time he bought shares, he picked up 100,000 shares for $4.1 million.

Keep an eye on UAL.  Crisis may be an opportunity here.

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