Trading ideas and portfolio tracking. Part II.

There were several trading days with a really high volume. What does it mean? It means a lot of stocks changed hands. Usually, it means that the majority who wanted to sell already sold the stocks, and there won't be heavy selling pressure in the future. This is the first good indicator. When I open the UA page in finviz, I see a good and a bad thing. 

A good thing is the chart. The price rebounded from the support level at about 6 dollars, forming a hammer and bullish engulfing slightly later. Potentially, there may be a double bottom pattern. So, the timing, given the high volume (which works not only in terms of market picking but also in market timing), is good. 

On the other hand, what I don't like is the empty spaces in statistics. It's not a big problem, because all the information is available on the Internet, but it still requires some additional job. I checked the Debt-to-Equity ratio, and it's about 1. Why do I check this parameter first of all? Today, heavy debt loads may force companies to file for bankruptcy protection, as Hertz did in the last week, and it may deteriorate the price. 

Besides, the signals described above, I believe in Under Armour because they secured one of the top celebrities of our time, that is The Rock. I believe the team and, in this particular case, the Rock can be a decisive factor of a mid-term success. So, I think Under Armour can be an excellent addition to our portfolio.  

Another result of my search was Coty. You can see the chart and statistics below. The bottom line is that I have mixed feelings about Coty. The chart pattern seems interesting, just like the one we saw in Under Armour. Besides, Price-to-Sales and Price-to-Book ratios and Dividends (even though they most likely will diminish this year) seem attractive. Besides, they launched Kylie Skin in Europe, which may affect the future profits. On the other hand, Profit Margin and EPS forecasts are terrible. And what I also don't like is the fact that we see high volume turnover for about 10 or 15 days, but the insider and institutional holdings decreased during this time. I don't like this because it means that the public bought the stocks. And the public, as we all know, isn't the best reference point. If something goes wrong, the public will fill the market with selling orders and can push the price even lower. 

So, what do I decide about Coty? Well, I'm a risk-seeking investor, so I will try the stock with several buts. 

• But number 1 - I will do it with a decreased volume. Most likely, I will buy about 500 stocks. The investment size will be 3 or 4 times lower than the one for UA.
• But number 2 - I will set stop loss. Usually when I invest in stocks, I don't use stop losses. But in this case, the high volume and decreased institutions' and insiders' transactions make me feel uneasy, so I want to be sure potential pressure won't affect me.

In the "New High" signal section, I found Chipotle Mexican Grill. This is the stock everyone was talking about some time ago, and it did a great rebounding from the Coronavirus crisis. The new all-time high may indicate something interesting ahead because the stock is in the strong uptrend for now.

Despite the strong trend, I'm going to skip this one. Why? First of all, it doesn't seem like a bargain. I prefer to invest in stocks that I believe have potential and whose team believes in the potential of the stock. But if you check out insiders' trading, you will see the following picture. 

And this picture is not ok for me. If you decide to go for this one, be careful. 

Finally, I want to talk about Hertz. This is not the stock from finviz signals, but it is something I want to talk about. First of all, it's important to note that I already have HTZ stocks, and this may affect my judgment. After all, we are humans, and we are vulnerable to biases and heuristics, I talked about in the Psychology course.

Hertz filed for bankruptcy protection on Friday, and the stock price plunged. The current price is $1.82. On the one hand, this is a bad signal. Hertz's main competitor, Avis, reached an agreement with the lenders to restructure the debt, while Hertz filed for bankruptcy. At the same time, Debt-to-Equity ratio for Hertz is 13.67 with all of the debt being long-term. The same ratio for Avis is 53. Yet, Avis managed to solve the situation while Hertz faces difficulties (possibly). 

Why do I believe in Hertz? First, of all the issues that the company faces are 99% the result of coronavirus. In this situation, it's not a good decision for a bank to kill the business (I'm working in an investment department in a bank), so the banks are interested in saving it as well. Secondly, the Hertz company belongs to Carl Icahn, an American billionaire. I doubt that he will let his business to fail, and, in fact, the last transaction of Icahn Associates Holding kind support my thesis. On 31 March Icahn bought Hertz stocks worth about 30 million dollars. Goldman Sachs and Morgan Stanley also invested heavily in Hertz stock recently. Together they bought 4 million stocks, which at the time of transaction worth about 12 million dollars. So, what am I going to do with it? I will also increase my position in Hertz. I believe bankruptcy filings almost always lead to an overreaction that can be exploited.