| Stock (Symbol) | Stock Price | |
Priceline.com (PCLN) |
$1220 |
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| Data is as of | Expected to Report | Sector |
February 25, 2015 |
May 6 – May 11 |
Retail & Travel |
| Sharek’s Take | ||
 Priceline (PCLN) just had 2015 profit est. slashed from $62.76 to $57.66 on foreign exchange issues due to a strong dollar and increased investment in recently acquired OpenTable. Investors reacted to the big drop in guidance by sending shares of PCLN higher. Why? The company’s Booking.com business remains strong as PCLN had+27% International bookings growth (compared to +3% in the U.S.). I think the main reason PCLN isn’t down is people will travel this Summer as a long, cold Winter is making us antsy to get out and very low gas prices will enable us. Still, PCLN is within 4% of my 2015 Fair Value so it’s not undervalued right now, but this is a perennial +20% grower that’s one of the best stocks to buy-and-hold. |
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| One-Year Chart | ||
 Stock was on a downward slope until the earnings release when it quickly made up for lost ground. Even after the dust has settled the stock is still rising. The 21 P/E is reasonable but note the low Estimates. PCLN always underpromised then overdelivers so I think profits will be good, just not as good as last year’s. |
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| Earnings Table | ||
 Revenue growth was a solid 19% as profits increased 23%. I’m impressed with both figures.PCLN missed profit estimates by 20 cents and these estimates had been lowered all year. Annual Profit Estimates took a big hit. This reminds me of the 2008-2009 period, where growth was expected to slow (it didn’t). Quarterly estimates look bad but I think PCLN will beat and even if it doesn’t investors don’t seem to mind. |
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| Fair Value | ||
 I usually have my Fair Value at around 27 times earnings, but have reduced it as the strong dollar is hurting results. Looking at PCLN’s history the stock usually sells at 20-22 times earnings and has a P/E of 21 now. |
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| Ten-Year Chart | ||
 One of the best stocks of the last decade — and all time. I’m not a big fan of the 8% profit growth set to occur this year and feel this is a good time for investors to take profits. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
8 of 24 |
Priceline lowered its guidance and investors shrugged it off and sent the stock higher. But now the stock is within 4% of its 2015 Fair Value so this would be a good time to take profits (and the market is overbought and due for a correction). Still, this is a phenomenal long-term winner so don’t sell more than half your position. |
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Aggressive Growth Portfolio
10 of 12 |
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