By Michael Cintolo, Chief Analyst, Cabot Market Letter and Cabot Top Ten Trader
From Cabot Wealth Advisory 6/5/14 Sign up for Cabot Wealth Advisory—it's free!
On the off-the-bottom side, I'm intrigued by TripAdvisor (TRIP), which is a much easier business to understand than Arris. It’s the leading travel information site on the planet, with millions of hotel, vacation rental, restaurant and attraction listings that are read by more than 260 million unique visitors each month. Those visitors have generated north of 150 million reviews (including more than 100 new reviews every minute!).
TripAdvisor makes 85% of its money via advertising, with the rest coming from premium subscriptions and the like. And business is very good—revenues consistently grow in the 20% to 25% range as it monetizes its user base, while cash flow has been excellent. And analysts see earnings up between 25% and 30% every year through 2019! I’m not exactly looking that far ahead, but the point is that TripAdvisor is still in the middle innings of its growth.
The stock pulled back a sharp 32% during the correction, but it banged out a bottom in the high 70s for a few weeks and has already surged back toward the century mark. There’s resistance up to 110, but buying a small position on dips of a couple of points should work out well if this market rally persists.
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From Cabot Wealth Advisory 7/19/12 Sign up for free Cabot Wealth Advisory e-newsletter
TripAdvisor (TRIP) is the leading online travel information site, with millions of user reviews (and another few dozen every minute) on hundreds of thousands of hotels, B&Bs, inns and even restaurants. What we like best here is that the firm serves a real mass market and it's the hands-down leader in the field—despite potential competition from others like Google, TripAdvisor has a huge head start and is benefiting from the network effect (more reviews = more traffic = more advertising).
TRIP was spun off from Expedia in December and the stock has performed well since—it's actually been gyrating higher in recent months, nosing out to a new high today. It reports earnings next Tuesday (July 24) evening, and while I think you could nibble here (maybe buying half of what you'd normally buy, dollar-wise), I'm more interested in seeing if the stock can extend its gains following its quarterly report.
There are a lot of uncertainties, of course, but I think this stock has big potential if the market gets going.For more information, click here.
141 Needham Street
Newton, Massachusetts 02464
|Index Membership: N/A
Industry: Internet Information Providers
Full Time Employees: 1,250
7/19/12 TripAdvisor (TRIP): The leading online travel information site