By Timothy Lutts, Chief Analyst, Cabot Stock of the Month
From Cabot Wealth Advisory 3/3/14 Sign up for Cabot Wealth Advisory—it's free!
More than a decade ago, Travelocity and Expedia were great investments, as consumers found that booking travel on the Internet was cheaper and more efficient than dealing with travel agents and making telephone calls.
Now HomeAway.com (AWAY) is the leading player in the next phase of empowering people to book vacations online—it enables people looking for vacation rentals to connect directly with people who have properties to rent. The company’s inventory encompasses over 545,000 properties in the U.S. and 345,000 in another 189 countries, and it’s still growing at a good clip.
In addition to its main site, the company also operates VRBO.com and VacationRentals.com in the United States; HomeAway.co.uk and OwnersDirect.co.uk in the United Kingdom; HomeAway.de in Germany; Abritel.fr and Homelidays.com in France; HomeAway.es and Toprural.es in Spain; AlugueTemporada.com.br in Brazil; HomeAway.com.au and Stayz.com.au in Australia; and Bookabach.co.nz in New Zealand and BedandBreakfast.com.
The company’s main strategy has been to charge property owners for listings, and the “renewal rate” for listing is currently 75%. But there’s a new pay-per-booking option that allows owners to pay only when their property is rented (about 10% of the rental fee), and this is opening up new sources of revenues.
AWAY was first recommended back in November in Cabot Top Ten Trader, after an excellent third-quarter earnings report sent the stock soaring. At the time, the stock was trading at 38, and readers who bought in our “recommended buy range” easily picked it up at 36 in the days following.
And last week, the company issued an excellent fourth-quarter earnings report—which sparked another gap higher!
Today, Cabot Top Ten Trader subscribers are sitting on profits of 30%.
So, you could simply jump in right here; after all, the main trend is up. But if you did, you’d be on your own, and I’d rather you get some consistent guidance. So what I really recommend is that you become a regular reader of Cabot Top Ten Trader, so you can get Chief Analyst Mike Cintolo’s latest thoughts on all of today’s greatest stocks—including when to sell and take profits in AWAY.
Every week, Mike presents 10 stocks that have great profit potential, and every week, he gives you follow-ups on all stocks that are still being watched. For active growth investors, there’s no better resource. Get more details here.
By Timothy Lutts, Chief Investment Strategist and Chief Analyst, Cabot Stock of the Month
From Cabot Wealth Advisory 11/18/13 Sign up for Cabot Wealth Advisory—it's free!
I last wrote about HomeAway (AWAY) back in July; it was the first of my Ten Revolutionary Stocks.
HomeAway is the Expedia of vacation rentals, providing a quick and safe way for travelers to connect with individual property owners looking to rent out an apartment, vacation house, RV, houseboat, etc. It’s the top online rental site in the U.S., France, Germany, Spain, Britain and Brazil. And it’s growing fast. The company’s most visible competitor is Airbnd, but Airbnb makes money by charging the renter, while HomeAway gets paid by the property owner, and that’s worked out to be the superior business model, in part because it brings yearly renewals.
Back in July, when I wrote about the stock, it had been basing since March, following a big four-month spurt higher, and was trading at 31. I wrote, “Today it pulled back to touch its 50-day moving average. I think this represents a decent setup short-term, and probably a great opportunity to get on board what has the potential to be one of the best revolutionary stocks of our time.”
Well the timing was good, but not great, because AWAY fell to 28 in August and it hit that support level again every month since. But two weeks ago, the company released an excellent third-quarter earnings report, which brought buyers running. The stock gapped higher on huge volume, closing at 34 on the first day. And last Friday it hit 39!
So, you could simply jump on the stock here, but unless you’re an expert, I sincerely recommend that you take your cues from one of my expert analysts, like Mike Cintolo, Chief Analyst of Cabot Market Letter, who first recommended HomeAway.
Mike will work hard to get you into stocks going up, ideally just before they do what HomeAway did! For more details, click here.
HomeAway (AWAY): A buy here could pay off
By Timothy Lutts, Chief Analyst, Cabot Stock of the Month, Editor of Cabot Stock of the Month
From Cabot Wealth Advisory 6/27/13 Sign up for free Cabot Wealth Advisory
Turning to the market, we’re now in correction mode, which is perfectly normal. If you’re substantially invested, you’ve probably lost some profits in recent weeks; that’s normal too.
But the good thing about corrections like these is that they give you an opportunity to find the most resilient stocks. They’re the ones most likely to break out to new highs once the market gets moving again.
One of these is Tesla Motors (TSLA), which I’ve mentioned here several times and which is still acting very well, building a base around 100. But I’m not going to write about Tesla today.
Another stock acting very well, which I do want to talk about, is HomeAway (AWAY), which is making great strides in the vacation business, just like Expedia and Priceline did in their day.
Here’s what Mike Cintolo wrote in Cabot Top Ten Trader on March 20, when the stock was trading at 31.
Travelers who want to avoid hotels and resorts can go to HomeAway’s website and find more than 720,000 vacation homes in 168 countries that are available for rental. This young company (founded in 2004) connects the properties’ owners or managers with the tourists looking for interesting accommodations and makes most of its money via listing fees. Revenue grew by 22% in 2012 and earnings popped up 100% in Q4. AWAY traded at 46 a couple of months after its June 2011 IPO, but dipped to 20 three times in 15 months before catching a real updraft on February 21 when a great earnings report gapped the stock up on big volume. AWAY is thinly traded, but a buy here could pay off as the company refines its pay-per-rental model and looks to offer related services.”
Since then, the stock has climbed as high as 34 and dipped as low as 28, but the overall trend is sideways, and with those strong fundamentals, the odds are very good that this sideways action can’t last much longer.
So, you could simply buy the stock right here and hold on hoping for a breakout above 34—but then you’d be on your own. What I recommend instead is that you take a risk-free subscription to Cabot Top Ten Trader, to get Mike’s latest insight on the stock, and many more like it. For details, click here.
From Cabot Wealth Advisory 3/25/13 Sign up for free Cabot Wealth Advisory
But you can invest in HomeAway (AWAY), which is actually the largest player in the vacation rental field. And I recommend it, thanks in part to the research done by Mike Cintolo, editor of Cabot Top Ten Trader.
Here’s what Mike Cintolo wrote just three weeks ago.
“With more than 720,000 paid vacation rental home listings in 168 countries, HomeAway is the world’s leading online marketplace of vacation rentals. These listings can be found on the company’s eponymous website, as well as HomeAway’s other websites, VacationRentals.com, VRBO.com and BedandBreakfast.com. The company specializes in connecting tourists with property owners looking to rent, providing rental owners and property managers a simple way to manage online bookings. HomeAway also assists in advertizing and marketing these properties via its network of websites. Business has been brisk for HomeAway, with the company growing earnings by an average of 10% and sales by at least 20% during the past six quarters. During HomeAway’s recent fourth-quarter earnings report, the company said it delivered 22% revenue growth in 2012, with a 32% increase in free cash flow. CEO Brian Sharpels attributed the growth to the company’s significant strides in implementing its long-term strategy. Looking ahead, HomeAway is zeroing in on the continued rollout of its e-commerce capabilities, including a pay-per-booking pricing model and distribution of value-added services.”
One thing Mike didn’t mention is his write-up is that while Airbnb gets paid by the renter, HomeAway gets paid by the property owner, most commonly on a regular basis, with yearly renewals. That seems to be the superior business model.
HomeAway is based in Austin, Texas. And before I discuss how to invest in it, I want to show you what I found in Cyprus using it. That’s part of the fun of researching travel-related stocks!
HomeAway has more than 1,400 Cyprus properties, substantially more than Airbnb, and most are much more professionally presented. At the low end, I found a private villa with pool for $65 a night, which looked like a great deal. At the high end, I found a gorgeous four-bedroom villa listed at $5,458 for a week.
Lastly, looking at the chart, here’s what Mike wrote three weeks ago.
“After opening at 27 following its initial public offering a year ago, AWAY found little buying support and ultimately succumbed to selling pressure. The stock plunged to a low near 19 by July, where bargain hunters stepped in and helped usher AWAY toward recovery. The ensuing rally ended in November when the company provided weak earnings guidance. The 20-level provided a firm backstop for AWAY, however, and, following a basing period during the fourth quarter of 2012, AWAY was once again headed skyward. Riding support at its 10-day and 25-day moving averages, the stock was poised to challenge its IPO heading into February, and finally eclipsed this technical hurdle in the wake of a strong fourth-quarter performance. AWAY is now trading just shy of 30, where it may enter a period of consolidation as it digests recent gains. We recommend buying on weakness (suggested buy range 28-31) and placing a stop loss near 27.
In the two weeks following that advice, AWAY traded calmly between 30 and 31, building a short base. But last week it broke out to new highs, after the company announced a strategic partnership with travelmob, which has a leading presence in Asia Pacific, and a bullish analyst note. So, you could step in and buy now; the stock is strong! But even wiser would be to take a trial subscription to Cabot Top Ten Trader, to get Mike’s latest advice on the stock. Click here for more details.
1011 West Fifth Street, Suite 300
Austin, Texas 78703
|Index Membership: N/A
Industry: Internet Information Providers
Full Time Employees: 1,542
11/18/13 HomeAway (AWAY): Top online rental site
6/27/13 HomeAway (AWAY): A buy here could pay off
3/25/12 HomeAway (AWAY): A superior business model