Page 1091 - How to Make Money in Stocks Trilogy

Buying Checklist 77

A Tale of 2 Stocks: Priceline.com vs. Expedia

In July 2009, we were just a few months into a new bull market that began
in March. As you were searching for stocks to buy, you might have come
across two big players in the online travel booking business, Priceline.com
and Expedia.
As we saw in the checklist, you want to pay particular attention to the top-
rated stocks in the top-ranked industry groups. In July, the Leisure–Travel
Booking group (known as Leisure–Services at the time) was ranked #11.
With that in mind, let’s look at the key facts known about Priceline and
Expedia at the time.
As you go through this, consider what you now know about what to look
for in a stock before you buy, and ask yourself:

• Which company looks stronger?
• Which stock has a higher likelihood of making a big price gain?
• Which one would you choose to invest your hard-earned money in?

Think about how each company stacks up against the “big rocks” we’ve
been discussing.

All data as of July 2009

Does the Company Have Big Earnings Growth?
Earnings-Per-Share (EPS) Growth in Prior 3 Quarters
Priceline.com Expedia
Quarter EPS Growth EPS Growth
Sep-08 51% –31%
Dec-08 34% –13%
Mar-09 43% –5%

While Expedia has shown negative earnings growth the last 3 quarters,
Priceline’s EPS growth has been above the 25% minimum and accelerated
in the most recent quarter.

Avg. Annual Earnings Growth over Last 3 Years
Priceline.com Expedia
74% 8%