I tend to make very impulsive purchases. I try to avoid that for stocks, but I still do it pretty regularly when I’m shopping for gadgets, electronics, books, etc. Here is a pretty impulsive decision although the money invested was less than 2% of my portfolio.
On January 14th, I bought shares of American Airlines (AMR) mainly because Barclays Capital had raised their target price from $14 to $20.
I purchased the stock at $8.12 thinking that surely there would be some value in buying a stock that an analyst has projected to hit more than 150% of the price on that day.
In addition, I looked at how the stock has been hammered in 2008 and 2009 and the news about layoffs to cut costs, new ways to charge customers, etc. Everyone expects that any new fees that they add will not be taken away, never ever. I’m a little bit of a fan of American Airlines. Although I hate their American Eagle short haul planes because they’re just too small. Those planes were not designed to fit 2 large men side by side. American Airlines has been treating me well ever since they matched my GOLD status with NWA. They give me good choices for seating and let me board earlier so that I can at least put some of my baggage in the overhead compartment.
On 2/12, Stifel Nicolaus upgraded AMR to a buy with a target price of $13. That was good news for me since it was still significantly higher than my purchased price.
I’m still holding AMR today, and so far I’m up 15%. What should I do next? The market has been fluctuating a lot; there is no reason for me to sell yet. With talks of a Chinese airline joining the One World alliance, further good news could raise the price of this stock. I’ll have to keep an eye out for this stock since airline stocks tend to be more volatile.
Here is a chart for AMR from one of my favourite sites to screen stocks: http://www.finviz.com
UPDATE: AMR declined to the point where my automatic sell stop kicked it. It has since gone back up but I’m already out with a small gain.