Cash-Rich Stocks to Buy Now: Expedia (EXPE)
Expedia (EXPE), ironically, might be that competitor.
EXPE, at nearly $9 billion in market cap, is too expensive for Priceline right now, but an eventual tethering might become a necessity of survival, what with Google encroaching upon their space.
Expedia has about $1.6 billion in cash and investments, which comes out to about $16 per share — not as impressive as the other two cash behemoths, but still nothing to sneeze at. Meanwhile, it trades at 15 times next year’s earnings, while those earnings are expected to grow by 16%.
One thing to note is that Expedia has a different model, and is spending much more on capex than PCLN, thus the free cash flow situation isn’t as great. So while the cash is definitely there on the books, EXPE is likely to keep using it to fund operations, and maybe slightly increase its trace dividend of 60 cents per share (0.9% yield).
Bottom line for Expedia is that while it might be the weakest of these three stocks to buy now, it has a little extra pepper in potentially being buyout bait down the line.
As of this writing, Lawrence Meyers was long AAPL and has sold naked puts against PCLN. He is president of PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture and world affairs. Contact him at firstname.lastname@example.org and follow his tweets @ichabodscranium.