Trade-Ideas: TripAdvisor (TRIP) Is Today's Momo Momentum Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified TripAdvisor ( TRIP) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified TripAdvisor as such a stock due to the following factors:

  • TRIP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $302.1 million.
  • TRIP has a PE ratio of 49.2.
  • TRIP is currently in the upper 30% of its 1-year range.
  • TRIP is in the upper 25% of its 20-day range.
  • TRIP is in the upper 35% of its 5-day range.
  • TRIP is currently trading above yesterday's high.
  • TRIP has experienced a gap between today's open and yesterday's close of 0.2%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on TRIP:

TripAdvisor, Inc., an online travel company, enables travelers to plan and have the perfect trip. It offers advice from real travelers and various travel choices and planning features with seamless links to booking tools. TRIP has a PE ratio of 49.2. Currently there are 7 analysts that rate TripAdvisor a buy, 2 analysts rate it a sell, and 10 rate it a hold.

The average volume for TripAdvisor has been 1.7 million shares per day over the past 30 days. TripAdvisor has a market cap of $9.8 billion and is part of the technology sector and internet industry. The stock has a beta of 3.33 and a short float of 17.4% with 4.56 days to cover. Shares are up 79.6% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates TripAdvisor as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.

Highlights from the ratings report include:
  • TRIP's revenue growth has slightly outpaced the industry average of 17.0%. Since the same quarter one year prior, revenues rose by 19.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, TRIP's share price has jumped by 138.37%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • TRIPADVISOR INC's earnings per share declined by 7.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TRIPADVISOR INC increased its bottom line by earning $1.36 versus $0.16 in the prior year. This year, the market expects an improvement in earnings ($1.67 versus $1.36).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet & Catalog Retail industry and the overall market, TRIPADVISOR INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has decreased by 5.8% when compared to the same quarter one year ago, dropping from $59.36 million to $55.88 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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