Trade: Long Priceline-PCLN/Short Expedia-EXPE

By: ispeculatornew
Date posted: 01.12.2010 (5:00 am) | Write a Comment  (4 Comments)

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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:

TickerNameSharesJan 14 2014 PriceJan 14 2014 Values
OMCOmnicom Group Inc29$73.91$2,217.30
MSFTMicrosoft Corp71$35.78$2,576.16
JCIJohnson Controls Inc39$51.92$2,076.80
PEPPepsiCo Inc/NC27$82.37$2,306.36
ETNEaton Corp31$75.70$2,346.70
DOVDover Corp23$95.42$2,290.08
ITWIllinois Tool Works Inc27$82.23$2,302.44
XLNXXilinx Inc37$46.05$1,703.85
SJMJM Smucker Co/The19$99.34$1,887.46
BLKBlackRock Inc10$310.52$3,415.72
TROWT Rowe Price Group Inc28$83.19$2,412.51
OXYOccidental Petroleum Corp21$92.31$2,030.82
XOMExxon Mobil Corp19$99.12$1,883.28
ADIAnalog Devices Inc43$49.71$2,187.24
HASHasbro Inc31$52.31$1,621.61
MATMattel Inc42$44.40$1,909.20
INTCIntel Corp53$26.51$1,405.03
BAXBaxter International23$69.66$1,671.84
IVZInvesco Ltd67$35.22$2,359.74
VWOVanguard FTSE Emerging Markets43$39.81$1,711.83
BNDVanguard Total Bond Market21$80.57$1,691.97

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.

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  1. Comment by IS — January 12, 2010 @ 8:53 pm

    Opening prices:

    PCLN: 216.06
    EXPE: 23.84

  2. […] a quick post to let you know that I will be closing off the trade on Priceline(PCLN) and Expedia(EXPE) as the trade is now over +20% […]

  3. […] I change something that is working. I have already done 2 successful trades on Priceline this year (+20,91% vs Expedia & +25,75% vs Priceline) but I still see an opportunity to trade the name against its […]

  4. […] 12 -PCLN/EXPE Jan 18 –NFLX/NILE Feb 8 –AAPL/AMZN Feb 22 –EBAY/KNOT March 8 –DHX/MWW April 26 –NFLX/NILE […]

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