PCLN Stock Is a Buy – Book Priceline Under $1,250 a Share

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Priceline.com (PCLN) is a giant in the online travel biz, and a big consumer name … and at just under $1,200 per share, PCLN stock also is the most expensive issue (on a stock-price basis) on Wall Street.

Priceline pcln stockAnd right now, Priceline stock has a lot to offer investors — even those who can only afford one or two shares — if you buy into PCLN anywhere under $1,250 a share.

First, remember that nominal share price is meaningless. One share of PCLN stock at $1,200 that goes up 10% to $1,320 will deliver as much profits as 100 shares of a $1.20 stock that goes up 10% to $1.32; it’s simple math, my friends.

Furthermore, Priceline’s uber-expensive share price actually helps add to its stability given that most day traders and retail investors have shied away from this company — giving PCLN stock a massive 98% institutional ownership rate. That provides stability that other stocks simply can’t compete with.

But beyond the logistics of PCLN stock ownership and share price, there are a lot of encouraging fundamentals to note:

Profits Still Strong: Although Priceline stock sold off after it lowered forecasts in August, profits were quite strong and easily topped Wall Street forecasts. In an era when many Internet companies like Amazon (AMZN) are sacrificing margins for growth, Priceline continues to prove that it doesn’t have to give up profits even as it expands its already impressive market share.

Long-Term Sales Growth: Furthermore, despite missing revenue forecasts in August, PCLN stock still has an amazing long-term track record of sales growth. Specifically, revenue has increased by at least 20% a year for each of the last seven years. Considering travel bookings are a largely discretionary expense, that kind of growth across troubled economic times bodes very well now that the global economy is mending.

Business Expansion: A big driver of Priceline stock has been its growth through expansion and acquisition. PCLN has made big inroads into Europe, and recently invested half a billion bucks in Chinese travel portal Ctrip.com (CTRP) as a way to find growth in the booming Asian market as well. The CTRP investment is particularly shrewd, since Priceline reserves the right to increase its stake further in the coming years as that marketplace inevitably evolves.

Share Performance: While past performance is no guarantee of future returns, just check out this track record for PCLN stock:

  • Up 95% since January 2013
  • Up 150% since January 2012
  • Up 195% since January 2011

Shares have sold off in the last few weeks, but the long-term trend is clearly higher for Priceline stock.

Fair Valuation: Among other high-growth travel stocks, TripAdvisor (TRIP) has a forward P/E of about 35, and Expedia (EXPE) and Orbitz Worldwide (OWW) are both pushing roughly 19. PCLN stock is lower than them all, with a forward price-to-earnings of about 18 right now — a fair valuation given its brisk growth.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great StocksAs of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP


Article printed from InvestorPlace Media, https://investorplace.com/2014/09/pcln-stock-priceline-expedia-trip/.

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