 Hey everyone, this is Dan with a new episode of my videos on recovery stocks. I published my last video on recovery stocks back in February of this year. Since that time, there have been many changes. In the last 20 days especially, the recovery stocks have been going up much faster than the broad market. I believe this is a good time to buy recovery stocks and have bought some more shares myself. Let's look at what's happening. In this video, I'd like to cover three recovery stocks. They are LUV, Southwest Airlines, JETS, the Airlines ETF, and RCL, Royal Caribbean, the cruise ship company. Let's look at how the prices have been moving for these three companies in the last year. This is the daily chart. The candlestick chart here is LUV, Southwest Airlines. The gray line here is the JETS ETF. The yellow line here is RCL, Royal Caribbean. Then we have the SPY line, which is the purple line here, and then the blue line here representing QQQ. SPY and QQQ are generally considered to be the broad market, representing the movements of the S&P 500 and NASDAQ 100 respectively. As we can see that during this one year, the recovery stock went up quite a bit, especially around April timeframe. That's when the pandemic was subsiding. Then after that, we were hit with the Delta variant. The cases started to peak up, the daily new cases. Subsequently, the travel or recovery stocks started to go down, and then recently they started to go back up again. The entire year, the recovery stock actually went up by about 41 percent, whereas the broad market represented by QQQ and SPY went up by only 27 percent. Therefore, even from a one-year perspective, the recovery stocks have been performing pretty well. Now, if you look at the two-month diagram, that's the hourly chart for two months. We can see that RCL went up by 15 percent, which is the best performing stock among all the lines here. LUV has been up 11 percent, JETS 7 percent, whereas the broad market unfortunately in the last two months, SPY went down by 4 percent, QQQ went down by 5.6 percent, and the semiconductor industry as represented by the ETF SMH actually went down even more by 7.7 percent. That's why if you invested in these three recovery stocks in the last two months, you have been doing pretty well compared to the other investments. If you like what you've seen so far, I'd like to encourage you to click the like, subscribe, and notification button so that you'll be notified when I publish the next video. It'll also encourage me to make more videos like this in the future. Thank you very much. Let's continue. There's a lot more information to cover. Recently, according to this news article from CNBC on September 10th, the cruise lines are starting to be active again. Even though CDC has issued certain warnings about cruise procedures and protocols, and we'll talk about that later on, and then Morgan Stanley said there's been a slowdown demand as compared I guess to 2019 before the pandemic broke up. But people who did participate in the cruises recently did enjoy them very much, and Morgan Stanley expect the industry capacity to reach about 55 percent during the third quarter as opposed to zero early on this year, and the capacity will be at 75 percent during the fourth quarter, definitely coming back up. And this article published on August 4th was saying that Royal Caribbean was starting to see increase in bookings, and they want to put 80 percent of its fleet back in service by year end 2021. During the second quarter, they already chopped up 50 percent more booking, and by June, Royal Caribbean expects to be receiving about 90 percent more bookings each week when compared to the first quarter. Definitely things are looking a lot better. Just to see what's going on, I personally call up this customer service desk at Royal Caribbean. That being on quite a few of their cruise ship myself, actually pretty enjoyable experience, although ever since the beginning of the pandemic, I have not gone on the cruise. I asked Royal Caribbean what kind of procedures they've been using during reaction to the pandemic. The following is the answer I got. First of all, they generally require the proof of vaccination for each passenger, unless the port where they depart from prohibits this type of requirement. From what I heard, the state of Florida still prohibits the cruise company from asking for proof of vaccination. But if you depart from, for example, New York, definitely they will require you to show the proof of vaccination. And they will be doing frequent PCR testing on board once the ship starts selling to ensure the safety of everyone. And the passengers will be designated into different groups. For example, one family is going to be within one group. The social distance will be maintained between groups during meal times. And for example, if they have a show on board, they will separate different groups. Face masks are required for certain areas, especially in enclosed areas. But if you're walking outside the boat, maybe in the open area, like near the swimming pool, of course, face masks will not be required. If one person within the group is tested positive with COVID, that person and the other people in the same group will be relocated to a special area on the ship, which is designated as the quarantine area. And then the infected passengers will be transported on shore and sent to the appropriate medical facilities for treatment as soon as possible, most likely when they make the next stop. With these procedures, it looks like they have been very careful with protecting the safety of the passengers. So far, there have been quite a few ships selling in different parts of the world already, and we have not heard about any horror stories like what happened to the infamous Diamond Princess back in the days when the pandemic was just starting. And they do have the proper procedures to handle situation where they have passengers that have been tested positive with COVID. I also look into the 10K report from Royal Caribbean. I purposely look up the 10K report, not last year 2020, but I looked at the report that was published in 2019 covering the year 2018, when things were pretty normal. I wanted to know where they got their customers, and I found that according to the 10K report, 47% of the passengers were from North America, 25% were from Europe, and 25% from Asia Pacific. In other words, if they want to see a recovery of their business volume, we should first be able to see the reduction in the daily new cases in these areas. So how are we doing in these areas? First of all, North America. United States, we see the peak here back in November, December of last year, and then they roll up the vaccine starting February, March, April timeframe, and a number of daily cases came down and then came the Delta variant, then we see a resurgence of new cases, and then with more vigilant procedures and more people getting vaccinated, finally the daily new cases are coming down. And with the death rate, daily death rate, we also see the similar peak and then with the second peak now finally it's coming down also, fortunately. If you look at Canada, we have these peaks here. Again, resurgence here due to the Delta variant, and looks like finally they're starting to get that under control. And for the daily death rate, it's still here high, but usually the death rate lacks the daily cases by about one month. So probably this peak here is equivalent of about this point here, but I would say probably within two to three weeks, the daily death rate will come down as well. At this point, the death rate is definitely a lot lower than back in January of this year, and then the daily new cases also are lower than back in April of this year. United Kingdom, reflecting what's happening in Europe, we have this big peak here also around January, December timeframe, then it came down and then came the Delta variant. It came up again, and then it came down a little bit. At this point, it's kind of flat. Then hopefully with the third booster shot, things will get under control quickly. The daily death rate is a bit of a resurgence here, although not very serious. Fortunately, Germany, Germany has been doing pretty well. Two peaks here, with the first peak being around December of last year, second peak around April of this year, and then the most recent peak starting late July, early August, and looks like it's coming down, fortunately, the daily death has been pretty low, fortunately, in the last few weeks. In other words, North America and Western Europe are generally seeing a reduction of daily new cases. That means people will be traveling a lot more from now on, and that's a good sign for the recovery stocks, for the airlines, and for a company like the Royal Caribbean. We can also look at Japan representing the Asia Pacific region. Definitely, we see a dramatic reduction in the daily new cases here in Japan, and also reduction in the new death rate. China is also a very important source of tourists, usually, but recently because of the passport control in China, from what I heard, not that many Chinese citizens are traveling outside of China, and that's why I will look at the China data probably a few months from now, when they open up more for people traveling abroad. If you look at the worldwide data, we also see the reduction in daily new COVID cases, which is good news, but as I mentioned in my other videos about Moderna and BioNTech, the world is still a few billion doses short on the COVID vaccines, and hopefully as they administer more vaccine doses during 2022, there will be a lot more people who feel safe to travel around the world. Now, this is very important data. It's published by TSA in the US, counting the number of travelers from day to day. This chart represents a daily number for three years, so 2019, 2020, and 2021. The gray line here represents the travel volume when everything was normal before the breakout of the pandemic, and then the orange line is 2020, as you know, starting from the middle of February, that's when the pandemic broke out in the US, and then we saw this very significant drop in travel volume, and then it recovered a little bit, but never much all the way through the end of last year, and then comes the beginning of this year, yet another dip, and then gradually started to recover. If you look at the gap between the gray line and the blue line, you can see the gap is narrowing. There's a bit of seasonality here apparently at the end of August, beginning of September, maybe because kids are back in school, so we don't see a lot of vacation travelers, so both of them came down a little bit, but at least the gap is narrowing. That means we are starting to see the travel volume getting back to normal. Especially with the success of the vaccines and the reduction of daily new cases, that's why I am very optimistic about these three recovery stocks. Specifically, Southwest Airlines, their routes are predominantly domestic routes in the US, because US is recovering faster than most other countries with regard to the pandemic. I believe Southwest Airlines is poised to increase their revenues quite a bit in the next few months. I already bought more Southwest shares in the last few days. I'm optimistic about Royal Caribbean, as well as Jet ETF in general. As I mentioned in my February video, one of my selection criteria for the recovery stocks is that whatever company I pick has to be strong enough to survive this pandemic, to avoid bankruptcy. Because for example, a amount of different airlines, if there are five or 10 airlines, if one or two of them unfortunately go bankrupt, the other airlines will pick up their business volume when the pandemic subsides. And therefore, it's a survival game. Whichever company can survive the best will come out winning. From this website, microaxis.com, we can see the probability of bankruptcy for the different companies, including the airlines. And Southwest Airlines, as of February, they had a bankruptcy probability of 13%, but now deteriorated a little bit, but it's only 17%. Southwest Airlines is still in pretty good shape compared to, for example, Delta, which went from 44% probability of bankruptcy to 50%. And then United from 47 to 50, and so on. It looks like everybody deteriorated because they've been losing money for more than a year, and that's why the probability of bankruptcy increased for all airlines. At this point, Southwest Airlines is still in the best shape compared to the other airlines. And that's why it's a good investment candidate. As all airlines start to recover. If you look at major cruise ship companies, Royal Caribbean, they went from 31% probability of bankruptcy to 26%, actually, if financial condition improved. And Norwegian went from 45% probability to 53%, deteriorated a little bit, Carnival Cruise deteriorated from 37% probability to 53% probability. And Royal Caribbean definitely is still in the best financial shape among these three major cruise lines. What are the analyst's opinions comparing today with February? The closing price when I published my last video, it was $59, now it actually dropped a little bit to 54, primarily because of the outbreak of the Delta variant, but now looks like the Delta variant is finally under control in the US in many countries in the world. If you look at the peak price for Southwest Airlines, at the time when I published my February video, the peak price for Southwest Airlines happened in 2020 and that was at 63.5, and actually around June, July timeframe. And actually after February of this year, Southwest Airlines reached a new height at 64.75 in 2021. So that's a new near-term peak that we should try to aim for. And then Yahoo Business actually changed their average target of 57 to 66, which is actually an upgrade. And then they have a high target of 76 and low target of 55. Louis Nevillea actually upgraded Southwest Airlines from an F rating, which of course is a very bad rating to a C rating. It's still kind of a hold rating. Louis Nevillea is not too bullish on Southwest Airlines. TipRanks.com upgraded Southwest from moderate buy to strong buy. They are very bullish on Southwest. The high rating increased from 65 to 76, average rating from 58 to 66, low rating from 51 to 55, and CNN Money kept their buy rating and then pretty much upgraded the high, medium, and low targets. The Street.com still maintains their hold rating. Overall, I would say most of the analysts are more bullish about Southwest now and back in February, which is a good sign. And that's one of the reasons why I think it's a good time to buy more shares. Royal Caribbean. When I published February video, it was at $96 now. It is at $91, actually came down a little bit. Again, that's mainly because of the Delta variant. And then the peak, when I published a video happening in 2020, that was $135. And then in 2021, the peak was at $99. Yahu Business increased their rating in general. Luz Nevillea also improved his rating for Royal Caribbean. And then we see the upgrading price targets from TipRanks.com and also upgrade of price targets from CNN Money. The Street.com still maintains its sell rating. Overall, I see the analysts are getting more bullish about Royal Caribbean as well. The Jets ETF is not rated by the analysts because it's an ETF. But I would say because it's an ETF, it will benefit us, the pandemic gets under control and thus we have more people traveling around the world. The good thing about the ETF is that even if one or two airlines go out of business, the ETF will still be around. It will not collapse with zero. And like if you bought a company and then the company goes bankrupt, then the stock becomes zero. So the ETF, you won't be in that trouble. That's why I picked the Jets ETF to be one of the investment choices for recovery stocks. For me to try to identify some pricing targets for the three stocks, I like to look at where they've been in the last two years. For example, for Southwest LUV, as represented by the candlestick chart, we can see that it made a maximum point around February of 2020. And this year, Southwest made a new high at 64.75 in the beginning of March. And since then, because of the Delta variant, it has come down, but recently in the last two, three weeks, it's picking up again. And if you compare where it is now and the most recent peak, which is 64.75, there's a distance of about 18% upward potential for the price to go up to reach the same level here. Similarly, for Royal Caribbean to reach the previous peak, which happened in January of 2020, there's a distance of 48% price increase potential for Royal Caribbean. And for Jets ETF, there's a potential of a 33% increase for Jets to get back to its pre-pandemic level. So what are my targets? For my targets are generally the previous peak before the pandemic. And for Southwest airline, which is an exception because it reached a higher high in 2021 here back in March. Therefore, my target for Southwest LUV is at $64 a year. And for the Jets ETF, my target is $33 a year, the previous peak, and Royal Caribbean at $134 a year. Also the previous peak. All these price targets are to be reached by the end of March, 2022, in about four to five months. Also today, October 5th, Southwest is at $54, Jets is at $24, and RCL at $91. What are my strategies? Because I'm bullish about these three stocks for the next one to two years, I'll be holding some shares for the next one or two years, and I'll be swing trading the rest. And I'm aware of the fact that the 2020 and 2021 peak levels will be very strong resistance levels. And when the prices start approaching those levels, most likely we will see short-term pullbacks. And that's when I would be most likely selling some shares to do swing trading. And then I'll pick it up again when the price gets to a lower point. For swing trading in general, I will be selling when the price pulls back at a major resistance level, or when adverse news develops. And I'll be buying more shares when the price bounces back from major support level, or when positive news develops. When I buy or sell stocks, I will in general update my subscribers by way of my Twitter messages. And I will also send out Twitter messages when I see any new development on the internet. At this point, I'd like to encourage you to also subscribe to my Twitter account, which is DanMarketL. For example, on October 1st, I tweeted that I bought more LUV Southwest shares because the daily new COVID cases are on the decline in the US. And then as of yesterday, I tweeted that I bought more ASML and BioNTech shares because the market seems to be turning up again after being bearish for the last couple of weeks. Again, I'd like to encourage you to click the like, subscribe and notification button. As usual, I will very much welcome your comments, questions and suggestions. I'd like to remind you that I'm not a financial advisor. I share my analyses and stocks trading strategies for educational purpose only. If you want to buy or sell stocks, you should make your own decision and you should definitely consult with your financial advisors before you do so. That's about wrap up my video for now. I will chat with you again in the next few days. In the meanwhile, I'd like to wish you the very best of luck with your financial investments.