This Top Pick is a contrarian play against the short sellers in this stock, as well as a value bet on cheaper travel.
Wyndham Worldwide Corporation (WYN)
from Bernie Schaeffer’s Option Advisor
We view Wyndham Worldwide Corp. (WYN) as a potential beneficiary of lower oil prices, as auto and airline travel could become more affordable in the coming year. Shares of WYN are entrenched in one of the prettiest trends we currently see in the market, hitting all-time highs and recently rallying above potential resistance in the $80 area, which is double the ’07 peak.
Behind this trend is several consecutive quarters of earnings beating Street estimates, suggesting sell-side research firms are underestimating the earnings power of WYN, and may continue to underestimate earnings behind the recent plunge in oil prices as demand for rooms increases.
As contrarians, who look for situations where sentiment is counter price action, we are enthused about WYN’s prospects. For example, despite the earnings and price momentum, the shorts, or those betting against the stock, have been pressing their bets since April. Short interest has more than doubled over this period, yet the shares have continued to make headway. The unwinding of these bets could be supportive of the shares next year.
Bernie Schaeffer, Bernie Schaeffer’s Option Advisor, www.SchaeffersResearch.com, 800-327-8833, December 24, 2014