As regular readers know, one of my favourite areas to invest in is online travel. There are many reasons of course but generally the idea behind is that it is a competitive field with a few listed companies. Ideally, Kayak would also be a listed company (maybe eventually) but for now, Priceline, Expedia and Orbitz do provide opportunities.
Right now, it certainly looks like Priceline is trading cheap compared to Expedia. It has a higher P/E ratio but compared to growth differences, I personally think that difference should be higher. As well, Expedia has been running all kinds of promotions to try to catch up, unsucessfully so far it seems.
Just take a look at the recent sales growth for both companies, it is not even close:
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Then, you can also take a look at traffic charts from Compete, again, Priceline clearly dominates
If you take a look at both stock charts, you will of course notice that Priceline has been the overperformer but I do think that it will remain that way and that Priceline will continue to rise quickly in the the coming year. As the economy continues to go through difficult times, Priceline, known as the cheaper way to book travel to most online travellers should be able to continue to gain ground on its competitors.
For your info, I was asked in yesterday’s post to give an idea of the chart that I use to find trade ideas, I will be writing a post about that tomorrow morning.