If the winter blues have you thinking of heading off to a warm,
sunny destination, you might find a hotel, flight or car rental
deal through the online travel site,
Expedia (Nasdaq: EXPE)
. Expedia is the largest online travel agency in the United States,
based on bookings. It generates the majority of itsrevenue
fromoffering cut-throat deals on hotels, flights and car
The company doesn't just appeal to cost-conscious U.S.
travelers. Expedia is gaining international popularity, too. In the
past five years, revenue from international markets has nearly
doubled. Europe and Asia-Pacific are particularly hot growth spots.
Travelers there, especially fromemerging markets in Asia, are
seeing a rise in their disposable income, allowing them to spend
more on getaways.
In addition to international expansion, strategic sell-offs,
acquisitions and collaborations have led to Expedia's growth. About
a year ago, Expedia spun off the travel site
TripAdvisor (Nasdaq: TRIP)
. More recently, the company's corporate travel management branch,
Egencia, acquired the Nordic-based travel management company, VIA
Travel. The move helped expand Expedia's European corporate travel
Expedia is also engaged in a joint venture with Air-Asia,
collaborates with Fotopedia Paris and Japan, and is gaining
presence in China through itspartnership with eLong, the leading
online Chinese travel planning site. All of these growth
opportunities should help Expedia continue to expand well into the
From a technical perspective,shares of the online travel company
certainly lookbullish . After hitting an October 2011 low of
$21.97, thestock formed amajor uptrend and shares have nearly
tripled in value.
In late April 2012, the stock jumped several dollars in a week,
surging from around $30 to $40. Since that time, an accelerated
uptrend line has formed, with shares continuing to climb steadily.
The stock is now testing resistance near a multi-year high of
$62.26 a share. If resistance can be definitively broken,
anascending triangle patternwill be bullishly completed.
According to themeasuring principle for an ascending triangle --
calculated by adding the height of the triangle to the breakout
level -- the stock could potentially reach a newprice target of
$86.52 ($62.26-$38 = $24.26; $24.26+$62.26 = $86.52). At current
levels, this target represents 42% potential gains.
However, with no nearby historical resistance in sight, shares
could potentially soar even higher. The stock has not seen these
levels since reaching its all-time high of $70.08 in October
The bullish technical outlook is supported by strong
fundamentals. Due to aggressive international expansion, analysts
project full-year 2012 revenue will rise 15% to $4 billion from
$3.5 billion last year. In the first quarter of 2013, analysts
expect revenue will expand 16% to $945 million compared with $816.5
million in the comparable year-ago period.
Theearnings outlook is similar. As the travel site continues to
attract a growing number of international travelers booking hotels
online, analysts project full-year 2012 earnings will rise 13% to
$3.12 per share from $2.75 in 2011. For the first quarter of 2013,
analysts expect hotel bookings, especially in Europe and Asia, will
cause earnings to jump about 19%, to 31 cents per share from 26
cents per share in the year-earlier quarter.
In addition to a strong fundamental outlook, Expedia also
rewards its shareholders with an annualdividend of 52 cents per
share for a 1%yield . And shareholders of record on or before Dec.
17 will receive aspecial dividend payment of 52 cents per share on
Dec. 28, 2012.
Risks to consider:
The worldeconomy remains fragile and travel is an easily cut,
discretionary expense. If less people travel, Expedia will generate
fewer online sales. However, with a focus on international
expansion, especially in the European and Asian-Pacific markets,
Expedia should continue to see strong growth opportunities
Action to Take -->
Buy Expedia if shares break above $62.26. Set stop-loss at $49.99,
near a shelf of support. Set initial price target at $86.52 for a
potential 39% gain by late 2013.
This article originally appeared on ProfitableTrading.com:
A Confirmed Breakout in This Stock Could Yield
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