Online Travel Sites Flying High

By Joey Fundora | September 28, 2010 AAA

Last week we took a look at some hotel stocks that have been performing quite well over the past year. After digging deeper into the travel and leisure sectors, we also uncovered a niche group that has been performing even better: online travel website companies. These stocks have been on a tear over the past few months and could be a group to watch moving forward. While they are already extended, they look to be primed for buying on a pullback.


IN PICTURES:

One of the best performers in this group is Priceline.com (Nasdaq:
PCLN). PCLN has almost doubled in price after trading just under $180 per shares only a few months ago. PCLN had originally backed off of the $280 level in May. Interestingly, when it gapped up in August, it opened right back at this level. It showed great strength after the gap and never pulled back, providing proof that buyers were willing to pay higher prices. It has followed through and continues to be one of the best performers in the current markets. While PCLN is extended, it could be one to watch on a pullback. The $305-$310 level may be on area to watch for support if it shows some weakness. (For more, see Online Travel Companies Soaring.)

Source: StockCharts.com

Expedia (Nasdaq:EXPE) is another online travel booking site that has also had a fantastic run over the past few months. EXPE pulled back from the $26 area in July as the markets began a correction and ended up consolidating in a cup-and-handle pattern over the next few months. EXPE cleared the handle portion of this base in early September and easily followed through to much higher prices. Much like PCLN, EXPE is extended from its base. However, this stock is in a clear uptrend and could provide a great opportunity on a pullback.

Source: StockCharts.com

Travelzoo (Nasdaq:TZOO) is another online travel site, although it focuses on vacation deals rather than bookings. In either case, TZOO has also performed quite well recently. TZOO recently cleared a few resistance levels and volume has really picked up. The $20-$22 level would be one area to watch if TZOO pulls back in the near future. This was the prior peak in May, and TZOO consolidated in this area again in September.

Source: StockCharts.com

It's interesting that the recent strength in this group is also showing up in foreign travel sites. Ctrip.com International (Nasdaq:CTRP), which focuses on China-related travel, has also experienced a strong rally over the past few months. Until this recent breakout, CTRP had been trading sideways between $36 and $42 for several months, with only a few spikes above and below this range. The past few sessions have seen CTRP clear its June peak, and the stock has now rallied from $38 to over $48 in about a month. While the levels are not as clear on this stock, the recent area of resistance near $44-$46 should act as support moving forward and traders should monitor this area on any weakness. (For more, see Gauging Support And Resistance With Price By Volume.)

Source: StockCharts.com

MakeMyTrip Limited (Nasdaq:MMYT) is a recent IPO that focuses on India-related travel. While this stock is very volatile, it has had an impressive debut. After opening in the low $20s, MMYT has since doubled to trade in the $40 range. The $35 level will be an important area to watch moving forward as this area has been a battleground over the past few weeks.

Source: StockCharts.com

Bottom Line
While there could be a variety of reasons as to why these stocks should or shouldn't be rallying, the bottom line is that they have all rallied above prior resistance levels. They have also been among the strongest performers over the past several weeks. These are the type of stocks that traders should monitor for orderly pullbacks as possible buying opportunities. While they are certainly extended at current levels, these stocks could continue to lead the markets higher over the next few months.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article.

comments powered by Disqus
Related Analysis
  1. Look Out: This Wall Street Darling May Be In For A Huge Drop
    Investing

    Look Out: This Wall Street Darling May Be In For A Huge Drop

  2. Sell This Wall Street Darling For A Potential 9% Gain In 6 Weeks
    Investing

    Sell This Wall Street Darling For A Potential 9% Gain In 6 Weeks

  3. Markets Hopeful About Russia? - Ahead of Wall Street
    Stock Analysis

    Markets Hopeful About Russia? - Ahead of Wall Street

  4. Bull of the Day: Expedia (EXPE) - Bull of the Day
    Stock Analysis

    Bull of the Day: Expedia (EXPE) - Bull of the Day

  5. Bull of the Day: MakeMyTrip (MMYT)  - Bull of the Day
    Stock Analysis

    Bull of the Day: MakeMyTrip (MMYT) - Bull of the Day

Trading Center