Pat McKeough responds to many requests from Members of his Inner Circle for specific stock investment advice as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle Members. And each week we offer you a report on one of the stocks profiled in these Q&A sessions. We give you Pat’s buy-hold-sell recommendation as well as his analysis of the stock. This is part of the specific buy, hold and sell advice we offer you in our daily posts. Every week you get “A Stock to Sell” on Monday, “Best Canadian Stocks” on Tuesday, and “U.S. Stock Picks” on Thursday.
Recently an Inner Circle Member asked us about online travel specialists Priceline. The company offers online reservations for airline tickets, hotels and other vacation essentials and successfully raised its profile with commercials featuring Canadian actor William Shatner. Priceline has made several key acquisitions in the past two years and expects to make more. Pat looks at the company’s financial situation and assesses its ability to maintain a strong market share as it expands its international operations.
Q: What do you think about Priceline as a stock? Thanks.
A: Priceline (symbol PCLN on Nasdaq; www.priceline.com) is an online travel company that offers airline tickets, hotel rooms, car rentals, vacation packages and cruises.
Customers can either buy in the traditional, price-disclosed manner or use the company’s Name Your Own Price service, which lets them make their own offers. Priceline then collects the offers and matches them against its database of seller inventory.
The company operates the Priceline.com website, as well as Bookings.com, Agoda.com and RentalCars.com. In 2012, it bought travel search engine Kayak for $1.8 billion. Kayak compiles airline and hotel prices from travel websites and generates considerable traffic for Priceline’s other sites. It also keeps it from having to depend heavily on Google for search traffic.
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Priceline holds cash of $6.2 billion, or $118.32 a share. Its $3.9 billion of long-term debt is a low 6.9% of its $56.5-billion market cap.
The company recently acquired OpenTable, an online restaurant reservation service, and will likely look for other acquisitions, given its high cash balance. It also recently expanded its partnership with China-based travel service Ctrip.com.
Priceline continues to benefit from rising demand for both travel and online booking—particularly for hotels—domestically and internationally. Steady increases in room nights booked should keep its revenue growing.
The company is a leader in the U.S. market, and its expanding international operations add to its growth prospects. The stock trades at 16.6 times Priceline’s forecast 2015 earnings of $64 a share.
We view Priceline as a hold, but only for aggressive investors.
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The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
This privacy policy is applicable to all TSI Network Visitors, Clients, Employees, Suppliers, Web sites, Management, and all other interested parties. Any links to or from our site are not covered by this policy. We encourage you to read the privacy policies of every site that you visit.
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What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
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Changes to this Policy
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Legal Notices and Disclaimers
The contents of this web site and our publications are based upon sources of information believed to be reliable, but no warranty or representation, expressed or implied, is given as to their accuracy or completeness. Any opinion reflects the Successful Investor’s judgment at the date of publication and neither the Successful Investor, nor any of its affiliated companies, nor any of their officers, directors or employees, accepts any responsibility in respect of the information or recommendations contained in the publications or on this web site. Moreover, the information or recommendations are subject to change without notice.
Information presented on this web site or contained in our publications is not an offer, nor a solicitation, to buy or sell any securities referred to on the web site or in the publications. The material is general information intended for recipients who understand the risks associated with an investment in any securities referred to in the publications or on this web site. The Successful Investor has made no determination regarding whether an investment, course of action, or associated risks are suitable for the recipient.
