In addition to tonight's new play, I am updating my radar screen.
Here is a list of stocks on my radar screen. These have potential to be LEAPS trades down the road if the right entry point presents itself. In no particular order:
MSFT, COST, AKAM, HLS, KMB, DECK, CBRL, CR, DE, BHI, LB, COST, SHW, LMT, NOC, GD, INTU, TTC, HUM, TMO, HP, APA, AKAM, IFF, IR, ALK, AAPL, ROP, FDX, SNA, SLB, VLO, TSO, NSC, CYT, ITW, PEP, EGN, CVS, WAG, DHR, GBX, TRN, VNET, CSX, AA, ALKS, WCN, ADM, TYC, GLW, THC
- New Trades -
Expedia Inc. - EXPE - close: 75.09
EXPE was on our watch list. The plan was to wait for shares to close above $75.00 and then buy calls the next morning. The stock met our entry point requirement with Friday's close at $75.09. We want to buy calls on Monday morning.
I do not see any changes from my earlier comments below.
EXPE is in the services sector. The company is in the super competitive online travel industry with rivals like Priceline.com (PCLN) and Orbitz Worldwide (OWW).
EXPE is developing a trend of beating analysts' estimates with strong profit and revenue growth. This past quarter EXPE reported revenues of $1.2 billion. That is the fifth quarter in a row that EXPE has delivered double-digit year over year revenue growth. The company has also seen surging growth in its bookings. Q3 2014 saw 15% bookings growth. Q4 2014 was +21%. Q1 2014 was +29%.
Analyst firm Cantor Fitzgerald recently offered bullish comments on EXPE and raised their price target. The company is having success with its Expedia Traveler Preference program. In Q3 2013 there were about 35,000 hotels in the program. By Q1 2014 that has grown to 51,000 hotels. As more hotels join it will boost EXPE's room nights metric and sales.
Billionaire hedge fund manager David Tepper's Appaloosa Management is also bullish on EXPE. The latest 13F filing showed that Appaloosa had initiated a new stake in EXPE in the first quarter of 2014.
Bears could argue that EXPE, PCLN and OWW could face competition from companies like Google and Facebook as they seek to boost their ad revenues to their large audiences. Reuters has reported that Google is experimenting with some programs with a few hotels. This threat is probably a few years away and could eventually make EXPE as potential takeover target.
Technically EXPE experienced a correction from $81 to $67 earlier this year. The stock found support in the $67 area and just recently EXPE has broken out past some key resistance. Currently shares hover just below short-term resistance at $74.00.
Our long-term target is the $90-100 zone.
Breakout trigger: Wait for a close above $75.00
then buy calls the next day with a stop at $69.25
BUY the 2016 Jan $90 call (EXPE160115C90) current ask $8.20
Option Format: symbol-year-month-day-call-strike
Chart of EXPE:
Originally listed on the Watch List: 06/01/14