You could have made 50% in one day with Party City (NYSE: PRTY) shares a week ago. It was a trend reversal following a massive downturn for the stock.
This obvious pariah of social distancing has seen its shares tank from $8 to $0.26 over the past year.
After all, who’s going to be throwing parties when the end result is possible death from the coronavirus?
Well, conventional wisdom is often wrong…
Just look at the move in casino stocks, airline stocks, hotel stocks and even theme park stocks since the lows in March. Some have doubled and even tripled.
Casinos reopened with bigger-than-expected crowds. Airlines are seeing an increase in bookings. Theme parks are expecting higher attendance than anticipated.
People want to get out!
As for parties, just take a look at shares of the alcohol producers and sellers… They are all on the comeback trail too.
Which leads us to Party City…
Last week, the company announced that it is in talks with creditors to restructure its debt. The shares soared from $1 to $1.52 (getting as high as $1.72 in the premarket) on the news.
They have since pulled back. If Party City can renegotiate its debt, the shares could be off to the races again, this time for real.
The trend in reopening is unmistakable, and it looks like the country will not close again even if the virus pops up. So you may be wondering why anyone would take the risk to hold a party at home.
As I stated above, people are flocking to bars, casinos, pool parties, etc. And soon, movie theaters will be reopening as well. My job is not to pass judgement. It’s to look at a trend, and that trend is telling me that people want their social lives back.
Action Plan: Party City shares currently trading around $1.40 is a speculation, pure and simple. It might be time to add some zing to your portfolio with a stock that can party like it’s 1999 again!
[adzerk-get-ad zone="245143" size="4"]About Karim Rahemtulla
Karim began his trading career early… very early. While attending boarding school in England, he recognized the value of the homemade snacks his mom sent him every semester and sold them for a profit to his fellow classmates, who were trying to avoid the horrendous British food they were served.
He then graduated to stocks and options, becoming one of the youngest chief financial officers of a brokerage and trading firm that cleared through Bear Stearns in the late 1980s. There, he learned trading skills from veterans of the business. They had already made their mistakes, and he recognized the value of the strategies they were using late in their careers.
As co-founder and chief options strategist for the groundbreaking publication Wall Street Daily, Karim turned to long-term equity anticipation securities (LEAPS) and put-selling strategies to help members capture gains. After that, he honed his strategies for readers of Automatic Trading Millionaire, where he didn’t record a single realized loss on 37 recommendations over an 18-month period.
While even he admits that record is not the norm, it showcases the effectiveness of a sound trading strategy.
His focus is on “smart” trading. Using volatility and proprietary probability modeling as his guideposts, he makes investments where risk and reward are defined ahead of time.
Today, Karim is all about lowering risk while enhancing returns using strategies such as LEAPS trading, spread trading, put selling and, of course, small cap investing. His background as the head of The Supper Club gives him unique insight into low-market-cap companies, and he brings that experience into the daily chats of The War Room.
Karim has more than 30 years of experience in options trading and international markets, and he is the author of the bestselling book Where in the World Should I Invest?
