Traders lay out a triple stock play to bet on a travel rebound

Changes are coming to travel amid the coronavirus pandemic.

The Transportation Security Administration says it will now issue fines to travelers who failed to wear a mask while in transit. The fines could be as large as $1,500.

That development could pave the way for a safer travel environment and entice hesitant consumers to begin long-delayed vacations. To ride the potential higher demand, two market watchers picked the top stocks that could benefit from an industry revival.

Danielle Shay, director of options at Simpler Trading, is betting on a recently public stock.

“I would actually put my money with Airbnb because you know I’m an active options trader and I know that the fundamentals don’t make a lot of sense here but I like the chart pattern,” Shay told CNBC’s “Trading Nation” on Friday.

Shay sees a pattern of higher highs and higher lows that have formed since mid-December, shortly after the company went public. The shares , she said, look to be breaking out toward $220. Airbnb traded above $196 on Monday.

“Right now people are using Airbnb a lot more than hotels and also a lot more than airplanes as well so you do have a little bit of macro backing but I think the technical setup here looks great for an options trade,” Shay said.

Craig Johnson, chief market technician at Piper Sandler, sees a similarly promising setup for Expedia heading into its earnings on Thursday.

“The chart still looks very good. You’re still making a nice series of higher highs. You’re back above your 50-[day moving average], you’re back above your 200-day moving average, and it looks like to us that this stock still has more room to run,” Johnson said during the same interview.

Expedia is expected to report a loss of $1.94 a share in its December-ended quarter after posting a profit of $1.24 a share a year earlier, according to analysts surveyed by FactSet. Sales are also projected expected to decline nearly 60%.

MGM Resorts, also scheduled to report this week, is another stock that shows promise, Johnson said.

“Here’s an example of a reopening trade, people getting out, wanting to experience the world again, heading back to Vegas,” Johnson said. The shares are “just now starting to break out to new highs and it looks like to us that this stock seems very strong heading into the earnings print.”

MGM, which reports Wednesday, is expected to post a loss of 95 cents a share for the three months to December, down from a profit of 8 cents a share a year earlier. Sales are projected to have dropped 30%.

Disclosure: Shay holds ABNB.

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