Investors reportedly should buy “lockdown losers” into 2021 as the economy begins to fully reopen after vaccines help tame the raging pandemic.
3Fourteen Research Founder Warren Pies recommends investors increase exposure to three industries that suffered during the early pandemic lockdowns: airlines, hotels and oil refiners, CNBC said.
“On a base level, buying Lockdown Losers here is akin to being long the permanence of human nature,” Pies wrote earlier this month. “We want to be long the permanence of human nature,” Pies wrote.
But while global travel is still languishing, Pies said investors should “get in front” of what could be a sharp rebound in mid-2021 by investing in two airline names — Spirit Airlines (SAVE) and JetBlue Airways (JBLU) — and two hotel stocks — Hyatt and Hilton.
Pies notes Spirit’s will benefit from domestic travel’s return. He also said JetBlue has “ample liquidity” to bridge the gap “to economic recovery.”
Meanwhile, both Hyatt (H) and Hilton (HLT) have strong property portfolios that make them attractive investments, Pies said.
“We see air travel as the true lynchpin to economic normalization,” he said. “The return of air travel will begin a chain of events that will lead to economic normalization in many pockets of the Lockdown Loser bucket.”
Oil refining is another industry that has taken a big hit in 2020 as the coronavirus pandemic slowed dented economic growth, thus decreasing the demand for crude.
Pies recommends investors buy Marathon Petroleum (MPC) and Valero Energy (VLO) as ways to play this trend.
In global markets, rising COVID-19 cases and social restrictions before the Christmas shopping season on Tuesday offset investor optimism over a vaccine-driven economic recovery next year.
Investors were also watching talks between London and Brussels on a trade deal after months of inconclusive discussions. They were keeping an eye on a U.S. fiscal stimulus talks, too, and on the Federal Reserve's last policy meeting of the year, which ends on Wednesday.
The number of coronavirus deaths in the United States exceeded 300,000 on Monday as the hardest-hit nation started its first vaccine inoculations, while tighter COVID-19 restrictions were imposed on London, Reuters reported.
Other countries across Europe were also set to impose new restrictions during the holiday season to rein the contagion. Germany adopted a stricter lockdown on Sunday.
"Much of Europe will have to weather tighter restrictions until at least early to mid-January. Q4 will be lost quarter for growth, but that should surprise no one," said AFS analyst Arne Petimezas in Amsterdam.
"Markets remain bifurcated, with the solid post-vaccine advances for equities, credit and commodities intact. Bond yields refuse to budge though, and in particularly euro zone government bond yields remain terribly depressed," he said.
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