New Trade: Long Expedia ($EXPE) & Short Travelzoo ($TZOO)

By: ispeculatornew
Date posted: 03.03.2014 (3:00 am) | Write a Comment  (0 Comments)

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It was a fairly slow week but things continue to go well so I certainly can’t complain. I’m considering closing my trade on EBAY & YHOO (currently up 28%) because of everything that’s going on with eBay these days (battle between the board and Carl Icahn) so stay tuned on that one:)

As will be the case all year, my long & short stock picks will be available to see in my live spreadsheet:

http://www.intelligentspeculator.net/livetrades

You can see the numbers for both companies involved in today’s trade here:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthSales 5Y Avg GrowthEPS 5Y Avg Growth
EXPEExpedia Inc78.5337.5717.6912.7318.383.6416.541.1535.3713.3711.1816.23
TZOOTravelzoo Inc23.6221.4717.8310.794.673.672.090.6410.3614.214.2N/A

As you can see in the chart below, there is a significant difference in terms of growth between these two companies and that has been true for almost 2 years with no signs of an upcoming reversal.

EXPE Revenue (Quarterly YoY Growth) Chart

EXPE Revenue (Quarterly YoY Growth) data by YCharts

$EXPELong Expedia (EXPE)

For some time, I had my doubts about Expedia and how it would perform once the spin-off of TripAdvisor was a done deal. It does certainly look like Expedia is doing very well. There are some other travel-related that I prefer (TRIP, PCLN) but this trade made a lot of sense to me given the fact that they are trading at virtually identical forward P/E ratios.

EXPE

Next earnings release: May 1st 2014

$TZOOShort Travelzoo (TZOO)

Travelzoo is a stock that I have not traded in some time and while it does seem to be picking up a bit of momentum after a big fall, I would personally stay away. From all the traffic metrics that I see as well as slower growth in revenues, I simply do not trust TZOO at its current valuation compared to other players.

TZOO

Next earnings release: April 21 2014

Disclaimer: No positions on Expedia (EXPE) or Travelzoo (TZOO) but I will initiate the trade on the open today

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