Expedia (EXPE) Showing Signs Of Being A 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 Expedia ( EXPE) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Expedia as such a stock due to the following factors:

  • EXPE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $269.7 million.
  • EXPE has a PE ratio of 46.7.
  • EXPE is currently in the upper 30% of its 1-year range.
  • EXPE is in the upper 25% of its 20-day range.
  • EXPE is in the upper 35% of its 5-day range.
  • EXPE is currently trading above yesterday's high.
  • EXPE has experienced a gap between today's open and yesterday's close of 1.2%.

'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 EXPE:

EXPE is a leading internet online travel company where end users can make hotel, air, rental car and vacation package bookings. EXPE also sells advertising to third parties via its network of websites. EXPE is the largest player globally with approximately 40% U.S. The stock currently has a dividend yield of 0.8%. EXPE has a PE ratio of 46.7. Currently there are 6 analysts that rate Expedia a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Expedia has been 2.1 million shares per day over the past 30 days. Expedia has a market cap of $9.1 billion and is part of the services sector and leisure industry. The stock has a beta of 0.10 and a short float of 10.5% with 3.37 days to cover. Shares are up 14.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Expedia as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, expanding profit margins, increase in stock price during the past year and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • EXPE's revenue growth has slightly outpaced the industry average of 15.4%. Since the same quarter one year prior, revenues rose by 18.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The gross profit margin for EXPEDIA INC is currently very high, coming in at 83.53%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.22% is above that of the industry average.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 1306.5% when compared to the same quarter one year prior, rising from $6.73 million to $94.72 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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