✈️ Expedia's Comeback Itinerary

Plus, a frozen feast is on the horizon — Thanksgiving just got a makeover!

October 18, 2024

Happy Friday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

  • 🟩 | US stocks rose Friday as Wall Street hit its sixth straight positive week, cementing the year’s longest winning streak. The Dow gained 0.1% and the S&P 500 was up 0.4%, both notching record closes. The Nasdaq also added 0.6%.

  • 📈 | One Notable Gainer: Netflix shares surged more than 11% after exceeding Q3 expectations with $5.40 per share on $9.83B revenue, prompting several analysts to raise price targets and forecast further growth.

  • 📉 | One Notable Decliner: CVS Health shares fell 5.2% after David Joyner replaced Karen Lynch as CEO, and the company issued weak Q3 earnings guidance of $1.05-$1.10 per share, below the $1.69 FactSet estimate.

  • ✈️ | Tomorrow's Trade: Expedia's Comeback Itinerary. Scroll down for more.

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S&P 500 Heatmap. Credit: Finviz

All Stock Heatmap. Credit: Finviz

Global ADR snapshot. Credit: Finviz

MARKET MOVERS

USM (+7.3%) US Cellular Shares Climb 11% on Deals for Spectrum Assets (DJN)

MGPI (-24.2%) Lake Street cuts MGP Ingredients to Hold rating (Investing.com)

AXP (-3.2%) American Express' Mixed Q3 Results (Benzinga)

ISRG (+10%) Intuitive Surgical Breaks Out On Massive Earnings Beat, But 2025 Launch Remains Key (IBD)

WAL (-8.9%) Western Alliance Bancorporation Shares Gap Down - Here's What Happened (MarketBeat)

OVERHEARD ON THE STREET

ABC News: Boeing is facing an FAA review as key supplier Spirit AeroSystems furloughs 700 workers due to a strike impacting production.

CNBC: Intel is seeking to sell a minority stake in its Altera unit, valued at $17 billion, to raise billions in cash, sources say.

Reuters: Meta releases AI models, including a "Self-Taught Evaluator," to reduce human involvement in evaluating other AI models' work.

AP: One of the largest US solar projects, backed by Google’s biggest clean energy purchase, opens in Texas, marking a key milestone.

WSJ: Spirit AeroSystems will furlough 700 employees for three weeks due to the ongoing Boeing machinist strike affecting the 767 and 777 programs.

TOMORROW’S TRADE IDEA, TODAY

Expedia’s Comeback Itinerary

Did Expedia Miss Its Flight?

Expedia Group (EXPE) has experienced slight bumpiness this year.

The stock plummeted in February after longtime CEO Peter Kern announced he would leave the company. Expedia shares are still up by less than 7.5% YTD, but that’s well behind competitors like Booking Holdings (BKNG). Its stock has soared 25% since January 2024.

Some analysts think that’s about to change. New CEO Ariane Gorin has found success thus far. And now several reports suggest that Expedia might be a buy — not (just) for investors, but for transport giant Uber (UBER), which is weighing an acquisition of Expedia, per a Financial Times report.

Improvement Across the Board

Expedia may have fallen behind its rivals, but it hasn’t thrown in the towel.

Under Gorin, the company has been focusing on increasing market share and efficiency to compete with companies like Booking. According to ClearBridge Investments analyst Naveen Jayasundaram, it is already making promising headway with Expedia and its other brands like Hotels.com and Vrbo.  

Conditions in the sector are favorable overall as well. Travel demand post-pandemic has remained strong, and consumer preference is trending toward online travel agents. But Uber is only considering buying one of them — which some market observers consider further evidence of Expedia’s promising long-term outlook.

Trading at a Discount

One headwind for Expedia has been concerns that competitors outside the online travel sector — such as hotel chains, or even Google (GOOGL) — could threaten its standing. But while its stock price has seen some volatility, its market share has remained strong.

Expedia was able to turn pandemic headaches into positives by integrating its brands, increasing cash flow, and making operations more efficient. Now, the stock is trading at a discount to Booking, which has some analysts believing it is currently undervalued.

Consensus analyst projections show significant earnings growth in the coming years: a 21.5% pop in earnings per share in 2024, and another 20% rise in 2025. If this forecast is to be believed, investors looking for an undervalued growth stock might not have to look further to “find theirs”.

Are you bullish or bearish on Expedia (EXPE) over the next 12 months?

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ON OUR RADAR

CNN: Butterball's new "Cook from Frozen" turkey simplifies Thanksgiving prep by eliminating thawing, requiring only unwrapping and baking.

CBS News: Gold's price hits a record $2,716.64 per ounce, rising 32% this year; experts predict it may surpass $3,000 soon, which may make now a key time to invest.

AP: As his term nears its end, Biden pushes to allocate billions for clean energy and offshore wind projects amid election pressures.

CNN: Young workers face challenges entering the job market, with 20-24 year-olds seeing the largest employment decline despite low unemployment.

AP: Wealthy Americans, benefiting from increased income and assets, are driving retail spending, supporting U.S. economic growth, while lower-income consumers struggle.

YESTERDAY’S POLL RESULTS

🟩🟩🟩🟩🟩🟩 🐂 Bullish

🟨🟨🟨⬜️⬜️⬜️ 🐻 Bearish

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