Thursday, May 14, 2009

Priceline.com (PCLN) in Investors Business Daily

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When I start seeing stocks featured in Investors Business Daily, I start to sweat - usually marks the near term top as the retail trader has piled in. (Un?)fortunately, Priceline.com (PCLN) seems to have made the cut after its recent earnings... I do like IBD's stories because they explain companies backgrounds in very easy to read format. And PCLN is not exactly a hidden small or mid cap player ...

We did start this position yesterday with a small stake - to go along with a very healthy chart but I am hoping for some weakness to build this position up at lower valuations. As mentioned yesterday the 20 day moving average was $98 so we got the dip there this morning, so I added to my small position with another small batch just above that price, and this is now to about a 0.9% stake. Still hoping to see it fall back to mid $80s.

I called PCLN a stealth recession play last year, sort of the Amazon.com (AMZN) in its niche due to the name your price model - or better said, maybe like an Overstock.com (OSTK) - and despite a horrid hit to the consumer they keep growing; albeit understandably at a slower pace.
  • Priceline cut through recessionary winds, blowing away first-quarter profit views on a hefty boost in U.S. and European travel bookings. Priceline.com (NasdaqGS:PCLN - News), which pioneered the name-your-price ticket service, has exceeded profit views by at least 10 cents a share for 10 straight quarters.
  • "This quarter further sets Priceline apart from their competitors," said Morningstar analyst Warren Miller. "To me, that speaks to quality management, and that's something we expect will persist in the future."
  • Priceline's system works, says Standard & Poor's equity analyst Scott Kessler. "Priceline's U.S. business continues to gain market share and consumers continue to gravitate to its name-your-price model," he said.
  • "The bottom line with Priceline is the story hasn't changed," said Piper Jaffray analyst Mike Olson. "It's doing well because cost-conscious consumers are using its name-your-own-price service. "And long-term, Priceline is still the best-positioned online travel agency because of strength in less-penetrated geographies." Olson says 60% of Priceline's bookings are in Europe. He says only 30% of European travel is bought online vs. 60% for the U.S. (I assume in Europe they use David Hasselhoff as their pitchman as opposed to Shatner? Well at least in Germany) ;)
  • Priceline's bookings for hotel room nights rose 36% from a year ago. Rental car days were up 15% and plane ticket sales 28%.
  • U.S. gross travel bookings rose 18.1% in the quarter. International gross travel bookings, mainly in Europe, grew 5.3%. In local currency -- without converting into the stronger U.S. dollar -- bookings would have grown 23.5%. (so if the dollar weakens again - as it has of late - this is a net positive for Priceline.com) Priceline's main foreign Web sites include Booking.com in Europe and Agoda.com in Asia.
[May 11, 2009: Priceline.com Continues to Execute Well]
[Feb 19, 2009: Priceline.com Impresses on Earnings]
[Aug 6, 2008: Priceline.com - Down 17% on Good Earnings?]
[May 8, 2008: 2 Earnings Reports of Note: AIG (AIG) and Priceline (PCLN)]

Long Priceline.com in fund; no personal position


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