This might be the next stock of the decade

TripAdvisor went public in December 2011 at $24 per share. Today it trades well north of $80.

By TheStreet.com Staff Nov 19, 2013 12:05PM

Tripadvisor website seen on a computer screen © NetPhotos/AlamyBy Bill Gunderson

 

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How important is TripAdvisor (TRIP) to the travel and leisure industry?

 

I recently went on a short vacation to a place that I read about on the Internet. The pictures of the place were fantastic. The restaurants looked superb and the golf course inviting. Throw in beautiful beaches plus world class fishing and I could hardly wait!

 

I looked up recent temperatures in the area and packed for 89-degree weather. A comb, a toothbrush, a bathing suit, some shorts and flip-flops ... what else does a guy need?

 

Oh yeah, my laptop. I still have a newsletter to write every weekend -- even while on vacation.

 

The flight was great, the weather was beautiful, and the sea was calm. The shrimp and bacon tacos were as good as any that I had eaten. The room was spotless, and the view was spectacular. I was settled in, ready to write my weekly newsletter.

 

But something was not quite right. It seemed like the room was awfully warm. I opened up all the windows to get some fresh air, while I tinkered with the thermostat. First I turned it to the left and patiently waited for cool air to flow through the room. Nothing.

 

Then I turned it all the way to the right, as this was the only choice left. I figured the room would turn into an iceberg any minute. Again, nothing. Something was not right. I had a newsletter to get out. It was too hot to work outside on the balcony. It was time to call the front desk.

 

It is always disconcerting to hear that the place was booked for the weekend and no other rooms were available, especially when one is so far from home and this is by far the best place in town. They told me that someone would be down right away to fix the A/C. Luckily, I had a small hand-held fan that I carry with me on airplanes, but it did little good in warding off 89-degree heat.

 

Needless to say, my temperature began to rise in more ways than one. Who gave this place five stars anyways?!

 

Knock, knock! Who's there? You fill in the punch line ...

 

It was the repairman with a box full of noisy tools to fix my A/C unit.

 

Stock market newsletters have a lot of numbers and decimal points in them. It takes a lot of concentration to write one. I should know, I have been doing it for the last 18 years.

 

Hammers, electric drills, ratchets and all those other funny looking things can make a lot of noise. It has a way of drowning out the seagulls and the crashing waves on the seashore.

 

After about 90 minutes of this racket, I was told that the job was finished. In the meantime, I did my best to get all of the decimal points in the right place.

 

I poured myself a cold drink and waited for the A/C to kick in. Nothing.

 

Even though it did not do anything the first time, I turned the thermostat all the way to the right. Same results as the first time. Nothing.

 

OK, being the engineer that I am, I turned it all the way to the left. My logical mind told me that this has to be full blast. Either my logic was messed up or the A/C still was not working!

 

My logic was fine and my internal temperature had reached the boiling point! This time when I called the front desk, there was a lot more urgency in my voice than before. I have to admit that I had also turned up the volume quite a bit.

 

I was told that the A/C repairman was on his way. While I was waiting, I logged into TripAdvisor (TRIP) and wrote a blistering review of a so-called five star resort! That was the best thing that I could have done.

 

When I showed the manager my posted review, I was promptly moved to a vacant room down the hall where the A/C worked just fine, thank you.

 

That review earned me two free nights and three free breakfast buffets.

 

How important is TripAdvisor to the travel and leisure industry?

 

How about the stock? Is it a Best Stock Now?

TripAdvisor became public in December 2011 at $24 per share. Today the stock trades well north of $80 per share and it is now a $12 billion dollar company.

 

I cannot help but compare the company to Priceline.com (PCLN). I wrote about Priceline in my book a few years ago and I continue to own the stock. It has been one of the best performing stocks in the entire market over the last one, three, five and 10 years! You can read my most recent article about the stock here.

 

Priceline continues to possess the three qualities that I demand in a stock: performance, value and a healthy stock chart.


How about TripAdvisor? Let's begin with performance

 

Performance

Obviously, the stock does not have a three-, five- or 10-year track record yet, but the last 12 months have been sensational. The stock currently earns a momentum grade of A-.

 

It is nice to have momentum, but value is equally as important.

 

Valuation

I use a formula that takes next year's earnings estimates ($2.20 per share) and extrapolates them out by the consenus growth rate (17.7 percemt) over the next five years.

 

I then apply a multiple that I think is appropriate for the shares and I establish a five-year target price. I like stocks that have at least 80 percent or more upside potential over the next five years.

 

TripAdvisor currently meets this criteria.

 

Stock Chart

Lastly, I like a good, healthy stock chart.

 

Nothing wrong with this one!

 

TRIP currently has the three criteria that I require in a stock. That is why I continue to own it here at my firm.

 

Of the 3,641 different investments that I track daily in my database, TRIP comes in at number 169.

 

More from TheStreet.com

15Comments
Nov 19, 2013 3:04PM
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Yet more proof that we don't make anything in this country anymore. Gee, I think I twitter and tweet and like it on Farcebook and hash tag it and stuff. God I hate social media.
Nov 19, 2013 3:27PM
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I had to cancel a flight with Priceline since I recieved news that my mother was dying.  This news came a week before my flight to visit her.  Priceline would not change my flight at the same price nor would they cancel without a large penalty.  I called American airlines direct they gave me a flight on the same day at the same rate I would have paid in an advance booking.  From now on I will use third party travel sites such as Priceline to determine my flight and then call the airline direct since they have much more flexibility.
Nov 19, 2013 2:51PM
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Once again, this is a company without worth because it owns and produces nothing but advice, sort of like the people who write these articles.  What they do can be easily copied.  This author compares it to Priceline, which is an indication that that market is beginning to have too many players.
Nov 19, 2013 3:08PM
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There are so many factors  that can bring a company like this down. Terrorist attacks, a poor economy, and a poor government. Which, incidentally, we already have. 

No thanks.
Nov 19, 2013 3:52PM
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Remember companies like Arriba! during the .com meltdown?  Well now we have a crappy company like Trip Advisor on the market.  What are its competitive advantages?  There really are none..... it is good if you were on board since day one.  But get out now, before this thing implodes!
Nov 19, 2013 1:09PM
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I completely understand how the review got you a move to a room with working A/C. How did it get you the free flights and breakfasts?
Nov 19, 2013 5:20PM
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So you write this review, hoping the lemmings buy in , so you can sell and make a p pot full before it goes boom.


Shame on you , manipulator.
Nov 19, 2013 7:23PM
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I'm 73yrs old and I just don't get it anymore. This crazy world of reservations a year in advance, paid in advance which I assume is necessary because half of the them are not kept because our digital life style requires double and triple checking. I run a small kennel and had to start a reservation policy because of endless changes or complete no shows and endless phone and e-mail correspondence some of which makes no sense at all. I actually feel sorry for the stress most of them are under. So I stepped off the grid.

However I rode my Harley across America 6,000 mi. with no reservations and had the time of my life and I do buy and sell internet stocks.

Nov 19, 2013 6:32PM
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the stockscouter tool on this site provided the same info.  they rate it a "7" out of ten and also show the average analyst recommends a "hold" and not a buy or strong buy.

 

the usual suspect is present here: current and future earnings don't support a higher price.

Nov 20, 2013 4:52AM
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Both companys SUCK! Invest in good rock solid here today and stay away from these articles, they want you to invest to inflate the stock price,and then they sell!


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