April 6, 2014 in City

Priceline produces huge upside

Universal Uclick
 

Might you be interested in a stock that features average annual growth of nearly 50 percent over the past decade, and that still seems undervalued? Thought so. Meet Priceline.com (Nasdaq: PCLN), the growth leader in the online travel industry.

You may know it as the name-your-own-price site for getting plane tickets, but it has grown into much more. Its Priceline Group offers online airline tickets, hotel rooms, rental cars, vacation packages and cruises, serving more than 180 countries and territories. Its Booking.com service is the global leader in online hotel reservations. In 2013 it bought KAYAK, a top site for comparing prices of flights, hotel rooms and car rentals.

Priceline is well diversified geographically, and emerging markets in Asia and Latin America offer enormous potential. The company is also adapting to the mobile revolution at full speed.

In recent years, Priceline has been outperforming its competition and gaining market share. In fiscal 2013, it took in $6.8 billion in revenue, up 29 percent over 2012, and $1.9 billion in net earnings, up 33 percent.

Despite that rapid growth, the company’s forward-looking price-to-earnings (P/E) ratio was recently only around 20, suggesting that Priceline still offers plenty of upside potential, especially in the long run. (The Motley Fool owns shares of Priceline.com and its newsletters have recommended the stock.)

Ask the Fool

Q: What is a trust? – M.R., Flagstaff, Ariz.

A: Often part of an estate plan, a trust is a legal structure that features someone (a “trustor”) giving control of property to a person or an institution (the “trustee”) for the benefit of someone else (the “beneficiary”). The beneficiary owns the property, but the trustee controls it – usually for a limited period (such as until the beneficiary reaches a certain age).

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