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In the U.S., the statistics surrounding the COVID-19 pandemic continue to improve. More than one-third of Americans are now fully vaccinated, and nearly half have been partially vaccinated.
There's already been much speculation as to which stocks will receive the greatest benefit from the massive reopening that has already begun. I decided to take a slightly different approach, by using a combination of fundamental and technical factors.
I selected a group of sectors that are positioned to benefit from the reopening, and then used technical analysis as a filter to find the best opportunities within those sectors. As a result, I found eight stocks across five different sectors that merit attention.
Walt Disney (DIS) -- Entertainment Sector
Most of us are ready for a vacation. That vacation is likely to take place within the U.S., as a large percentage of the population is already vaccinated here.
Combine that with the fact that the pandemic has been especially hard on kids, some of whom have been separated from their friends and classmates for nearly a year, and there is a pent-up demand for family vacations. That's good news for Disney, which should see huge demand for its theme parks and cruises.
After a 31% gain in 2020, this stock is nearly unchanged year-to-date. That's not necessarily a bad thing; since mid-January, Disney has been consolidating last year's gains. That consolidation has taken the form of a symmetrical triangle. This pattern tends to resolve in the direction of the previous trend. In this case, that's bullish.
Source: TradeStation
Note also that Disney is consolidating on low volume (shaded yellow). That's typical behavior during a consolidation.
My price target for Disney is $215.
Choice Hotels International (CHH) -- Hospitality Sector
Hotels should be an obvious choice for the reopening, but not every hotel stock has a great-looking chart. The best of the bunch appears to be Choice Hotels, which has been adhering to its bullish trendline for over a year.
Source: TradeStation
Choice has formed an ascending triangle pattern (shaded yellow) over the past two months. Based on this bullish pattern, combined with the stock's persistent trend, I expect Choice to reach $130.
Caterpillar (CAT) and Deere & Co. (DE) -- Construction Sector
With no end in sight to the infrastructure boom, both of these names are positioned for a strong year.
The charts agree.
Source: TradeStation
Both Caterpillar and Deere have just broken out from ascending triangles to reach their respective all-time highs. As a result, I expect Caterpillar to reach $270, and Deere to hit $425.
Schlumberger (SLB) and Chevron (CVX) -- Energy Sector
As the economy picks up, demand for energy should increase. As a result, energy prices, which have already been on the rise, should continue to move higher.
In this sector, the best chart belongs to Schlumberger, which has sprung from a saucer pattern to reach its highest price in over a year. I'm looking for this stock to reach $36.
Source: TradeStation
Chevron has formed a similar pattern, but must first deal with nearby resistance at $112 (red dotted line). Chevron should eventually reach $124.
Source: TradeStation
Goldman Sachs (GS) and JPMorgan Chase (JPM) -- Financial Sector
Shares of these financial services giants are taking off as the economic recovery takes hold. Goldman Sachs recently launched from a bullish cup-and-handle pattern and has broken out to a fresh all-time high. Shares of the investment bank should reach $400.
Source: TradeStation
Meanwhile, JPMorgan has broken out from a two-month rectangular consolidation. I expect this stock to reach $175.
Source: TradeStation
Final Thoughts
During this exercise, I was surprised to learn that many names that are anticipated to succeed due to the reopening actually have unattractive charts. Be sure to check the chart before you enter into any investment for any reason.
