We have seen great gains in the markets since last year. By now, I’m sure many investors are second guessing whether or not to hold onto those stocks that have brought them out of the troughs.
There is no great formula that we can use to determine whether or not a stock will continue on its upward journey or if it will begin its descent. As we all know, this market is a gamble. Our best defense is to stay in tune with the company’s current news, watch the trends in that sector and to scan for catalysts that will support further growth.
Take, for example, Priceline.com Inc. (PCLN). This company has been on fire for months now. The stock has gone from $173.32 to $561.88 over the last 52 weeks. Amazing gains for a consumer related, services stock. I have read numerous reports from the less than positive analysts stating that Priceline had far exceeded its ceiling and that it was sell asap or be damned.
This is not to say that a stock like Priceline.com doesn’t have its down days. They all do. But if you look at the current chart for the past year, you will see that it has continued on a very smooth, positive uptrend that has brought it into new territory and stability for investors.
Financial results for Priceline’s first quarter showed us why the stock has been so explosive. Travel bookings were $4.7 billion in the first quarter, an increase of 57.3% over a year ago. Revenues in the first quarter were $809.3 million, a 38.5% increase over a year ago. The company’s international operations contributed revenues in the 1st quarter of $389.1 million, an 80% increase versus a year ago. More than positive growth.
Looking forward, Priceline’s President and CEO, Jeffery H. Boyd states, "Globally, we intend to retain our focus on extending our reach in established and new geographic markets and providing an outstanding consumer experience to build the strength of our brands." This is a positive sign that there is no intention of the company laying stagnant and only basking in their recent accomplishments.
Sticking to your convictions will pay off if you’ve done your homework. I’m staying long Priceline.com, and hopefully my convictions will watch the stock move up to $600.
Disclosure: I am long PCLN.