During these uncertain times, I’m sure the last thing on the majority of investors’ minds is betting on travel having a V-shape rebound. We’re not completely sold on this notion that travel is completely out, however. This small cap Travel Services company might just have the potential to rebound in a major way, assuming everything stays on course.
Even though there is still a large population of people terrified of COVID-19, looking at Google Trends, people in the US have increased their search about travel by 22.5% using the April 2020 through following the pandemic outbreak. Though that’s probably not enough to convince everyone that ‘travel is back,’ we’d like to include that momentum when talking about this stock.
Yatra Online (Nasdaq:YTRA) stock has had some interesting moves recently. Not only did it break through its downward trending resistance in mid-September, but its recent higher lows have been insinuating a potential upward breakout. That’s not even including yesterday’s +6.42% move, making the stock break above its 100-day SMA, which has served as additional resistance as of late.
With all of these levels, we’d like to paint a more specific picture. As shares closed at $.86/share yesterday, it has four main price points we’d like to talk about. There are two general support points, $.75 (which served as support back in June and August). For final support we have the $.65 level, which would serve as the neckline for an inverse head and shoulders pattern. Anything below this point would be considered dangerous territory, which is why we set our stop loss at $.64. For resistance, we have the ‘gap theory’ resistance level of $.97 from the June 18th close. However, if this is broken, we feel it’s blue skies until the June 5th high of $1.60, which means if we see prices above $.97 relatively soon, $1.60 is our price target. This leads to a very attractive risk-reward ratio of 3.5:1. Simply put, with these moves we’re looking at 95% upside versus 25.5% downside using the $1.60 price target and $.64 stop loss. Our estimate is that this move could occur within three to five months.