Trading countertrend moves can be profitable but risky, so it pays to line up as many factors as possible in our favor before putting money to work. When a stock sports a price-to-earnings (P/E) ratio that even a technical analyst such as me thinks is low, it’s worth a look. When it is oversold at support, I’ll get interested. And when the price of its main input commodity starts to fall, I’ll consider a quick snapback trade. This is the case with American Airlines (Nasdaq: AAL). Read More
Trading countertrend moves can be profitable but risky, so it pays to line up as many factors as possible in our favor before putting money to work. When a stock sports a price-to-earnings (P/E) ratio that even a technical analyst such as me thinks is low, it’s worth a look. When it is oversold at support, I’ll get interested. And when the price of its main input commodity starts to fall, I’ll consider a quick snapback trade. This is the case with American Airlines (Nasdaq: AAL). #-ad_banner-# I will admit that as a chartist, looking at fundamentals gives me the willies, but AAL has a trailing P/E ratio of just 3.1. That’s not only insanely low compared to the S&P 500, which has a P/E ratio of 19.1, but it’s less than half of the industry average of 6.3. Even based on next year’s earnings, AAL trades at just 5.7 times estimates. The stock has fallen more than 20% in the past month and a half, but the recent drop in oil prices following a multimonth rally could result in a… Read More