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Expedia Stock Prepares for Takeoff … Again (EXPE)

Last week's dip presented the perfect buying opportunity. Watch for more.

Star travel stock Expedia (EXPE) had the late summer blues along with the rest of the market last week, dipping below its 200-day moving average as investors rushed for exits across the board.


Since then, Expedia stock — just like everyone else — has been trying to recover from that rut. And so far, it’s doing a pretty good job.

Shares of EXPE are back above that $112 moving average and are sitting around $115 now. That’s just 10% off the stock’s 52-week high and puts the stock’s year-to-date gains at a sweet and savory 35% — not bad considering the broader market has dipped around 3% since 2015 started.

Expedia stock’s success isn’t surprising when you peek at its recent organic growth, though. In 2011, the company’s sales tallied $3.45 billion … then expanded by 17% year-over-year to tally $4.03 billion in 2012. The next year upped that figure 18% to $4.77 billion. And then 2014 topped things off with 21% growth, breaking the $5 billion mark pretty handily (for a grand sales total of $5.76).

Such speedy sales growth is impressive considering so many companies were expanding earnings through cost-cutting or share buybacks or other shenanigans in recent years, in the absence of organic growth.

Expedia Soaring on Earnings, Dividend Growth

While Expedia’s earnings growth hasn’t been as eye-popping in recent years, earnings are expected to expand dramatically over the next half-decade. For the current quarter, analysts have upped their estimates by 9% over the last three months, and they’re 11% more optimistic about next quarter than they were 90 days ago. The latter estimate represents 34% year-over-year EPS growth, too … a contributing factor in the long-term estimate for 18% per year over the next half-decade.

The growth doesn’t stop there, either. Expedia has increased its dividend every year since executing a 2:1 stock split in 2011: 9 cents per quarter in 2012 grew to 13 cents later that year, which grew to 15 cents in 2013, 18 cents in 2014 and 24 cents already this year.

While the yield still doesn’t break 1% right now thanks in part to Expedia stock’s recent climb, it’s the cherry on top of an appealing growth story. Had you bought in 2013, for instance, you’d be enjoying a 1.6% yield. Besides, most companies growing earnings as fast as Expedia don’t offer a payout at all.

Add all these numbers up and it’s clear that Expedia stock is a growth pick to keep an eye on. Between its relative strength and strong organic expansion, shares of EXPE seem poised to continue weathering the market’s storm in the months to come. Investors want to make sure they find a smart entry point, though. Hindsight is 20/20, of course, but last week’s slight rut would have made for a perfect time to snag some shares.

Keep an eye out for another blip on the radar. If Expedia stock fails to meet the high expectations in any upcoming earnings report, take a dive on the dip. The long-term promise of EXPE is evidenced in everything from dividend growth to sales strength; expect shares to travel even higher.

Alyssa Oursler is based in San Francisco and writes about technology, investing, gender and entrepreneurship. Her work has appeared on Forbes, Business Insider, MSN Money and more. You can follow her on Twitter here or check out her personal site here. As of this writing, she did not hold a position in any of the aforementioned securities.

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