Zacks Investment Ideas feature highlights: TripAdvisor, TravelZoo, Expedia and Priceline.com
CHICAGO, Feb. 8, 2013 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: TripAdvisor (Nasdaq: TRIP), TravelZoo (Nasdaq: TZOO), Expedia (Nasdaq: EXPE) and Priceline.com (Nasdaq: PCLN)
4 Stocks to Play the Global Travel Boom
There are a bunch of directions investors could go when looking for travel plays. The most obvious is the hotel and resort companies. The airlines and cruise ships are another.
But what about the companies that consumers go to to plan their trips? The Internet has revolutionized travel. Twenty years ago, to plan a trip, you'd have to go to a travel agent with your ideas of your trip and the best you could do was to pick up some brochures.
Now, travelers have the world at their fingertips on the Internet but that has caused its own problems as there is so much information, who has time to sort through it all?
Companies that present the easiest way to search through information are moving to the forefront of the travel industry. Traveling has gone social in a big way. Travelers want to make connections with other travelers and they want deals. Companies that give travelers these two basic things will thrive.
And while you may think that some of these companies have been around a number of years so that there isn't much growth, they are still finding it in the emerging market countries where the middle class is expanding. A growing middle class means more discretionary spending money which should translate into more travel.
4 Companies Cashing In On The Dream Trip
TripAdvisor (Nasdaq: TRIP)
TripAdvisor is the largest online travel research company in the world. Who doesn't go on it and dream of that dream vacation every once in awhile- especially in the midst of winter's cold and snow?
It offers reviews of hotels, restaurants and attractions around the world. It operates tripadvisor sites in 30 countries as well as China, which operates under the brand daodao.com. In 2012, TripAdvisor was averaging about 60 million unique monthly visitors.
In the third quarter of 2012, TripAdvisor made 79% of its revenue from click-based advertising, 11% from display-based advertising and 10% from subscription.
The company was spun off from Expedia in 2011 and shares have had a rocky ride during that however they recently hit a new all-time high.
For a company trading with a forward P/E of 28, expected earnings growth isn't that great for 2012. But earnings are supposed to ramp up in 2013.
2012 expected earnings growth of 5%
2013 expected earnings growth of 20.3%
TripAdvisor is a Zacks Rank #2 (Buy). It reports first quarter earnings on Feb 13.
TravelZoo (Nasdaq: TZOO)
TravelZoo is a particular favorite of travel fans dreaming of that "too good to pass up" dream trip. Every Wednesday, it blasts out the TravelZoo Top 20 deals to its 26 million subscribers in North America, Europe and Asia Pacific.
TravelZoo has had 1.5 million downloads of its smart phone app. It isn't restricted solely to travel as it also publishes deals on restaurants and entertainment.
On Jan 24, TravelZoo reported its fourth quarter results and it beat the Zacks Consensus by 9%. Revenue rose 5% to $37 million. TravelZoo is the smallest of these four stock picks with a market cap of only $329 million.
The stock soared in 2011 to $100 a share before crashing back to earth. It has traded in a narrow range since.
Shares aren't cheap though. TravelZoo trades with a forward P/E of 17.2. Earnings growth is also expected to be negative in 2013.
2013 expected earnings growth of -7.5%.
TravelZoo is a Zacks Rank #3 (Hold).
Expedia (Nasdaq: EXPE)
Expedia is one of the world's largest online travel agents with its Expedia.com brand available in 30 countries. It also operates hotels.com, hotwire.com, Venere and eLong, China's second largest online travel agency.
On Feb 5, the company reported its fourth quarter results and it beat the Zacks Consensus by 2 cents. Revenue rose 24% while gross bookings jumped 19%. Its biggest growth region was Asia-Pacific. International bookings were up 32% in the quarter.
Expedia is not resting on its laurels. It will acquire a 61.6% stake in Germany's trivago, a hotel metasearch company, for $647 million. Its expected to close in the first half of 2013.
The earnings growth is still there.
Expected 2013 earnings growth of 16.4%
Expected 2014 earnings growth of 20.6%
The shares are at two year highs. They're not exactly cheap as Expedia trades at 20x forward estimates. It's a Zacks Rank #3 (Hold).
Priceline.com (Nasdaq: PCLN)
Priceline.com is one of the world's largest online travel agents. It operates a bunch of travel sites including Priceline.com, booking.com, agoda.com and rentalcars.com. Most are familiar with Priceline's "name your price" promotion with William Shatner.
But booking.com has been its key to growth over the last several years. Booking.com is the largest hotel booking site in the world. Headquartered in Europe, and concentrating on the European market, booking.com wasn't launched in the United States until 2008.
The company isn't afraid of acquiring companies to extend its growth. In November 2012, Priceline.com announced it was acquiring airline fare site Kayak for $1.8 billion. It's expected to close in the first quarter of 2013.
Shares have soared over the last few years as growth has surged. Priceline.com is still an aggressive growth story.
Expected 2012 earnings growth: 33%
Expected 2013 earnings growth: 21%
But the secret is out. Like its peers, Priceline.com isn't cheap either. It trades with a forward P/E of 19.3, well above the average of the S&P 500 of 13.5. It's a Zacks Rank #3 (Hold). Priceline.com is scheduled to report fourth quarter 2012 earnings results on Mar 4.
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