Smooth Sailing at Priceline

Investors have certainly beamed Priceline (PCLN - Cramer's Take - Stockpickr) up this year.

Shares in the William Shatner-fronted online travel company have surged, in spite of renewed terror threats and fears that the economy is slowing. While rival Expedia (EXPE - Cramer's Take - Stockpickr) has lost a third of its value after repeated earnings setbacks, solid performer Priceline has soared 46%.

Now, while the government warns fliers against carrying liquids in their carry-on baggage, investors are hoping Priceline can keep surfing the discount-travel wave.

"We continue to believe Priceline is well-positioned in the online travel industry and expect it to maintain the highest growth rate in the industry for the foreseeable future," writes Stifel Nicolaus analyst Scott Devitt in a note to clients this week.

The going has been a bit rough of late. Priceline shares sank 3% Wednesday after Devitt cut his rating to hold from buy on valuation concerns. "We would become interested in the shares again in the upper-$20s," he said. Priceline closed Wednesday at $31.26.

Priceline wasn't the only travel stock to get hammered Wednesday. Expedia dropped 1.4%, and online publisher Travelzoo (TZOO - Cramer's Take - Stockpickr), another solid performer this year with a 42% gain, dropped 11%.

Priceline, which gained its notoriety by letting people name their own price, now sells the same airfare, hotel rooms and rental cars for published prices. Consumers have responded well to the fixed-price offerings, sending gross travel bookings up 62% in the last quarter. Priceline also is benefiting from two well-timed acquisitions in Europe, a market that some observers say is underpenetrated for Internet travel.