Trade of The Week: Two-Bagging Thomas Cook

Do you remember that a couple of months ago I talked about the “flatliners” — those stocks that have fallen a long way over a long period of time and whose price is just bumping along the bottom now that all the sellers have sold and no-one (for the moment) wants to buy?

One such flatliner that I identified on 15 November was Thomas Cook. I took a punt at 20.9p-per-share, and I was pleased to see yesterday that the price had decisively broken upwards from the flatline such that it is now a “two-bagger” (doubled in price) as shown in the following InterTrader chart:

The lower horizontal line shows the buying price, and the higher horizontal line indicates the guaranteed stop order (a great feature of InterTrader) that is locking in an 80% profit. As I’ve trailed the guaranteed stop order as tight as it will go on this particular position trade, I reckon I’ll get stopped out pretty soon. If so, then one of two things will happen:

• The price will fall right back down, I can buy again more cheaply (than I stopped out), and I can have another bite at the same cherry.
• The price will resume its upwards trajectory soon after stopping me out, and I’ll have to be content with having banked a 80% gain.

Well, it’s not a bad pair of outcomes, is it? And it might not stop out just yet, in which case my holding could go to infinity… and beyond!