Small Cap Republic Airways a Cool Way to Trade the Volatile Sector

Steve Kanaval |

All one needs to know about trading small cap stocks can be learned by taking a look at Republic Airways ($RJET) price action since the end of July. Now keep in mind, we’ve had pilot walk outs and union issues like the scene in the film Wall Street, in which leverage is applied to move the stock. 

But I can tell you the trading action is terrific. Since late July, shares traded from $9.00 to $3.00, then back to $5.00, then down to $2.00 and back up today to $6.00…and I love it. Bring on the volatility – the sector and market cap need a face – and RJET is it.

We all know this airline, and if you’re a regional traveler, you no doubt fly it often. Republic Airways provides passenger service on 1,200 flights daily to 100 cities in the US and Canada. It provides fixed-fee regional airline services under United ($UAL) Express, Delta ($DAL) Connection, or US Airways Express/American Eagle. As of December 31, 2014, the company operated a combined fleet of 250 aircraft. The company was founded in 1996 and is headquartered in Indianapolis, Indiana.

The tentative agreement the regional air carrier reached with its pilots union on Monday continued to provide a boost, as the drawn out dispute with its pilots union led to operational disruptions, reduced flying commitments, and concerns that a corporate restructuring would be needed.

Union Agreement Sends Stock Soaring

On Monday, the stock soared 82% to a two-month high after the tentative agreement was announced. Cowen & Co. analyst Helane Becker followed up by upgrading Republic Airways to “market perform” from “underperform,” and boosted her stock price target to $6.00 from $1.00. The company said the vote to ratify the agreement is expected to end in late October.

I love following the small cap stocks, they have all the components of the mega cap stocks like Google, Inc. ($GOOG), Facebook, Inc. ($FB) and Amazon.com, Inc. ($AMZN) with volatility and cool market drivers, the only difference is that you don't have to buck up $100k to capture the volatility – you can do this in a $5.00 stock instead of a $500 dollar stock. Last time I checked, a 50% move was a 50% move, and the money that hits your account still adds up the same.

We have many stories about small cap stocks. I hope you continue to come here for the exciting analysis and attention we give to this trading sector. 

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DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
UAL United Continental Holdings 72.74 0.31 0.43 2,875,263
FB Facebook Inc. 118.91 0.96 0.81 22,438,297
DAL Delta Air Lines Inc. 51.35 0.25 0.49 9,488,523
AMZN Amazon.com Inc. 767.33 -3.09 -0.40 3,189,297
GOOG Alphabet Inc. 776.42 5.23 0.68 1,487,959
RJET Republic Airways Holdings Inc. n/a n/a n/a 0

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