Editor's Note

I spent hours trying to find a bullish play but the small cap sector is desolated. Out of roughly 300 stocks I reviewed only four had decent charts and those all had earnings over the next two weeks. I do not think I have ever seen such ugly charts. Hopefully, one the election is over the situation will improve.


No New Bullish Plays


SABR - Sabre Corporation - Company Profile

Sabre Corporation provides technology solutions to the travel and tourism industry. The company operates through two segments, Travel Network, and Airline and Hospitality Solutions. The Travel Network segment operates a business-to-business travel marketplace that offers travel content, such as inventory, prices, and availability from a range of travel suppliers, including airlines, hotels, car rental brands, rail carriers, cruise lines, and tour operators with a network of travel buyers comprising online and offline travel agencies, travel management companies, and corporate travel departments. The Airline and Hospitality Solutions segment offers a portfolio of software technology products and solutions through software-as-a-service and hosted delivery models to airlines, hotel properties, and other travel suppliers. This segment provides SabreSonic Customer Sales & Service, a reservation system that provides capabilities around managing sales and customer service across an airline's diverse touch points; Sabre AirVision Marketing & Planning, a set of airline commercial planning solutions; and Sabre AirCentre Enterprise Operations, a set of solutions for the holistic planning and management of airline, airport, and customer operations. In addition, this segment offers software and solutions to hotel properties comprising central reservation system, property management solution, and marketing and consulting services. Company description from FinViz.com.

Sabre Corp is a service company that was spun off from American Airlines and the company appears to be struggling with earnings misses and lowered guidance. They reported earnings of 27 cents that missed estimates for 33 cents. They posted revenue of $839 million that rose +6.9% but missed estimates for $852 million.

They guided for revenue to grow to $758 million in Q4 but analysts were expecting $834 million. For the full year they guided for earnings of $1.34-$1.40 on revenue of $3.37-$3.40 billion and analysts were expecting $1.43 on revenue of $3.39 billion.

They blamed the bankruptcy of a travel agency business for a 2 cent impact to earnings but they missed by 6 cents. Revenue rose 6.9% but earnings declined 6.9%. Those ratios are not moving in the right direction. Their Travel Network revenue increased by 2.3% to $582.4 million but operating income fell -11.1% to $182.5 million. Operating margins fell from 36.1% to 31.3%. It was not a good report.

Shares were already declining before the report and they gapped down another $3 after the news. Friday's close at $23.18 was a new 52-week closing low and it appears to be poised to make a new two-year low.

Sell short SABR shares, currently $23.18, initial stop loss $24.25.