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Priceline Buys OpenTable

Stock (Symbol) Stock Price

Priceline.com (PCLN)

$1279

Data is as of Expected to Report Sector

June 2, 2013

Aug 4 – Aug 8

Retail & Travel

Sharek’s Take
David SharekPriceline keeps the growth opportunity going with its purchase of OpenTable (OPEN). Priceline sure knows how to keep profit’s growing. It’s purchase of Booking.com for $135 million in cash back in 2005 was by far the best purchase the company ever made, as International sales caught up to and eventually surpassed domestic sales (now Intl sales are more than 2x Domestic) and Booking is the world’s largest brand for booking accommodations. Then last year PCLN bought Kayak, which was known for being the best site for getting the best prices on flights and hotels. Now the company nabs OpenTable, and will expand its reservation business into restaurant reservations, though OPEN’s profit growth isn’t that great as the site seems mature. Priceline now has the ability to continue to grow at +20% well into the future.
One-Year Chart
PCLN_2014_Q2Ok, enough with the companies PCLN has bought, let’s look at the stock right now. P/E of 24 is reasonable considering how rapidly profits have grown at (bottom/left). Estimates should get beat as management usually plays that game well. PCLN on a bit of a dip, good time to buy more.
Earnings Table
PCLN_2014_Q2_EPSRevenue grew 26% last quarter and profits surged 36%.
 
As it usually does, PCLN whipped earnings estimates.
 
Annual Profit Estimates continue to climb higher at a normal rate.
 
Quarterly growth shows around 25% profit growth is expected the next four quarters, but I think PCLN will beat and have 30% growth.
Fair Value
PCLN_2014_Q2_PHPriceline has ALWAYS had a P/E that is too low. One of the best stocks of our generation and every year the stock’s undervalued. I feel PCLN deserves to sell for 28 times profits, it has 40% upside to 2015’s Fair Value.
Ten-Year Chart
PCLN_2014_Q2_10yrPCLN stock has grown 47% a year during the decade because profits have grown 50% per year. Profit growth follows stock growth.
Power Ranking Bottom Line
Growth Portfolio

5 of 25

Priceline’s purchase of OpenTable will continue the company’s stellar track record of capitalizing on growth opportunity. PCLN also has great consistency and high certainty, so this stock is a top-five holding when you consider the safety factor.
 
PCLN is ranked 5th in both the 25 stock Growth Portfolio and 12 stock Aggressive Growth Portfolio
Power Rankings.

Aggressive Growth Portfolio

5 of 12

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