After hitting a one-year low of $59.50 in August, the stock hit a one-year high of $144.34 in May. This morning, PCLN opened at $119.78. So far today the stock has hit a low of $114.38 and a high of $121.95. As of 12:10, PCLN is trading at $117.95, down $7.18 (-5.7%). The chart for PCLN looks neutral and improving, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.
For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $155 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in seven weeks as long as PCLN is below $155 at August expiration. PCLN would have to rise by more than 32% before we would start to lose money. Learn more about this type of trade here.
PCLN hasn't been above $145 at all in the past year and has shown resistance around $132 recently. This trade could be risky if the company's earnings (due out in early August) are a positive surprise, but even if that happens, this position could be protected by resistance PCLN might find around $140, where it topped out in May.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in PCLN or EXPE.
MOST NOTEWORTHY: GTX Inc, Akeena Solar and NexMed were today's noteworthy initiations:
Rodman & Renshaw is positive on GTX Inc's (NASDAQ: GTXI) opportunity for Acapodene in prostate cancer and Ostarine for muscle wasting. The firm started shares with an Outperform rating and $22 target.
Akeena Solar (NASDAQ: AKNS) was initiated with a Buy rating at Merriman. The firm believes the company is positioned to generate a high margin recurring revenue stream through the licensing of its Andalay proprietary rack mounting system.
Roth Capital expects NexMed's (NASDAQ: NEXM) Phase III data for its antifungal Lamisil, expected in mid-2008, to be positive. The firm, which started NexMed with a Buy rating and $2.50 target, said early clinical data demonstrated a roughly 7-8X improvement in fungal reductions versus the competitive topical formulation sold as Penlac. The analyst said Phase III trial will admittedly have a different end point, but this data makes them bullish.
MOST NOTEWORTHY: Priceline.com, Monster and Internap were today's noteworthy downgrades:
Susquehanna downgraded Priceline.com (NASDAQ: PCLN) to Neutral from Positive as they believe upside may be difficult given the macro environment, competition, and currency headwinds.
JP Morgan lowered Monster (NASDAQ: MNST) to Neutral from Overweight following the company's expectations for higher 1Q08 operating expenses.
Internap (NASDAQ: INAP) was downgraded by Merriman to Neutral from Buy as they believe upside will be limited until the company can complete its integration of the VitalStream CDN acquisition.
Priceline (NASDAQ: PCLN)'s unbelievable quarter, which saw the company best earnings estimates by $0.12, may mean that investors pay attention to CTRIP.com (NASDAQ: CTRP) numbers due out next week. While numbers were up across the board international bookings surged.
Priceline's gross bookings growth momentum continued in the fourth quarter with international growth accelerating to 113.0% year-over-year and the domestic growth rate increasing sequentially to 24.2% led by increasing retail airline ticket bookings," said Jeffery H. Boyd, Priceline's President and Chief Executive Officer. "Internationally, we believe that our wide geographic reach, new market initiatives and extensive inventory are providing sustained impetus for growth. We believe that in the United States, our value positioning and brand promotion through offline and online channels is driving above-category growth rates in an uncertain economic environment.
CTRIP.com is the Chinese equivalent of Priceline. The company has also seen earnings grow nicely, and with a growing Chinese middle class, leisure activities are becoming more and more in demand. Throw in the Olympics this summer, and CTRIP may very well benefit from all this as it is the leader in bookings fields in China. With the stock beaten down, investors may want to take a closer look at this interesting Chinese travel play.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has no position in any stock mentioned as of 2/18/08.
Regular readers of BloggingStocks will find no shortage of stock picks for 2008 on our pages. Steven Halpern alone has compiled about 120 picks from the investment advisors he follows. But plenty of other bloggers have favorites for 2008 to share.
In an effort to consolidate the wealth of ideas into one handy post, here are a few of our bloggers' favorite selections for the year ahead:
Priceline (NASDAQ: PCLN) is the current favorite of Beth Gaston Moon. It's already had an amazing run in 2007, climbing from about $45 to $120 a share. Looking for a lower-priced stock? Beth recently spotlighted 10 Stocks for Under $10.
Deckers Outdoor (NASDAQ: DECK) is a stock I picked in a recent video, which Beth likes as well. I think it will continue to surprise to the upside on the strength of sales of its trendy Ugg boots. Zac Bissonnette thinks it will no doubt flame out at some point.
A look at 52-week highs often shows where the market is pointing for its leadership when it moves up, or safety when it sells off. A few notable companies that hit highs last week:
Priceline.com (NASDAQ: PCLN): Shares in the online travel company have almost tripled from their one-year low and now trade just shy of $110. Given the carnage in the airline industry, this may seem odd. But being an online middle man is very different from having to fuel the planes and maintain the hotels. The company's gross travel booking rose 54% in the third quarter, pushed by strength in its Europe business. Total revenue rose from $313 million in the quarter last year to $417 million this year. E-commerce can be a pretty good business, even if the industries the company serves are not doing well.
Charles Schwab Corp. (NASDAQ: SCHW): Financial services looks like a train wreck of an industry. But, with retail trading running strong, full-service and discount brokers are doing well, as long as they don't have assets in the mortgage-backed securities area. Schwab seems smart enough to have dodged that bullet. It hit a 52-week high of over $24 this last week. Daily trades by clients hit almost 319,000 in October, up 29% from the same month last year.
Priceline (NASDAQ: PCLN)'s higher profits are taking shares up 14%. And Rio Tinto (NYSE: RTP) is up 9% on buyout rumors.
Jones Soda (NASDAQ: JSDA) is trading off 19% due to poor earnings. And Leap Wireless (NASDAQ: LEAP) is off 15% on news that it will have to restate earnings.
In this day of record-high fuel costs and erratic airline fares, it's important to have a reliable travel agent. For some, it's the online wonder of Priceline.com (NASDAQ: PCLN), which offers traditional online-travel aids as well as a name-your-own-price service. Which, by the way, never works for me. I guess no one wants to accept $150 for a weekend trip from St. Louis to Seattle.
Anyway, Priceline has benefited from the nation's needy travelers, as evidenced by its third-quarter profit figures, released after the close on Thursday. The firm said third-quarter net income reached $104.4 million, or $2.27 per share, up dramatically from year-ago results of $47.8 million, or $1.05 per share. Excluding items, PCLN banked $1.58 per share, 30 cents above the $1.28 expected on Wall Street.
Revenue rose 33% during the 3-month reporting period to $417.3 million. This was 7.7% higher than analysts' consensus target of $387.5 million.
PCLN officials credited the building profit to success at the Booking.com site (the firm's European brand), as well as domestic growth. In after-hours action, PCLN is showing a gain of 12.85 points, or more than 15%. A move of this magnitude in regular trading on Friday would lift the stock to a new 52-week high and put it a chip-shot away from the psychologically important 100 level.
Five Orbitz insiders bought close to $600,000 worth of Orbitz Worldwide Inc's (NYSE: OWW) stock between $9.55 to $10.10 last week. This is another sign that better days could be ahead for the online travel business.
Expedia Inc (NASDAQ: EXPE) earlier this summer announced plans to repurchase 42% of its stock through a tender offer, before the collapse of the high-yield market caused the company to reduce its share buyback.
Collapsed share buyback or not, the executives at the top online travel companies are becoming increasingly bullish. Barry Diller, Expedia's chairman, said in the most recent earnings call that this is a business that can handle leverage, suggesting pricing in this industry is improving. Additionally, Priceline.com Inc (NASDAQ: PCLN) also reported very strong results.
After having a severe industry downturn in 2006, the industry is beginning a nice upcycle. The trend is your friend in the online travel business.
MOST NOTEWORTHY: The machinery industry, Sohu.com (SOHU), Intuit (INTU), Priceline.com (PCLN) and Expedia (EXPE) were today's noteworthy initiations:
JP Morgan assumed coverage of 5 machinery stocks: The firm assumed Eaton (NYSE: ETN) and Illinois Tool Works (NYSE: ITW) with Overweight ratings and Ingersoll-Rand (NYSE: IR), Parker Hannifin (NYSE: PH) and Kennametal (NYSE: KMT) with Neutral ratings. JP Morgan's top picks in the group are Illinois Tool Works and Eaton.
Pali initiated Sohu.com (NASDAQ: SOHU) with a Buy rating and $41 target and believes the Olympic Games represent the biggest growth catalyst for the company.
Jefferies started shares of Intuit (NASDAQ: INTU) with a Buy rating and $34 target, likes the momentum in TurboTax and QuickBooks and sees potential upside fo FY08 expectations.
Banc of America initiated Priceline.com (NASDAQ: PCLN) with a Buy rating and $96 target and is positive on the company's European positioning given expectations for top line growth and margin expansion. The firm also started shares of Expedia (NASDAQ: EXPE) with a Buy rating and $35 target, positive on the company's strong management, solid competitive positioning and improving fundamentals.
OTHER INITIATIONS:
First Albany assumed coverage of Cougar Biotechnology (OTC: CGRB) with a Buy rating and $29 target.
Priceline (NASDAQ: PCLN) August straddle Expensive at $7.20 into EPS. PCLN is recently up $3.08 to $64.81. PCLN will report EPS after the close tonight. PCLN August straddle is priced at $7.20. PCLN September option implied volatility of 54 is above its 26-week average of 36 according to Track Data, suggesting larger price fluctuations.
Sprint Nextel (NYSE: S) option prices Elevated as expected into 8/8 EPS. S is expected to report EPS of 22 cents before the open on 8/8 according to Thomson First Call. Stanford Group says "a key data point will be whether S has been able to turn around its postpaid subscriber business." S August 20 straddle is at $1.70. S September option implied volatility of 39 is above its 26-week average of 29 according to Track Data, suggesting larger risks.
Knot Inc. (NASDAQ: KNOT) August straddle Expensive at $3.50 EPS & Outlook. KNOT, the nations leading wedding resource that reaches over 1 million engaged couples each year, will report EPS on 8/8. CIBC says "the 23% drop in the stock since the reporting of 1Q is largely attributed to investors' growing skepticism of management's ability to effectively monetize its assets. Without a material catalyst, the shares are not yet 'cheap' enough." KNOT August 17.5 straddle is at $3.50 according to Track Data, suggesting larger fluctuations.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
There's been lots of dealmaking with online travel portal, Orbitz Worldwide Inc. (NYSE: OWW). Back in 2003, the company went public, and then a year later sold out to Cendant. Cendant then meshed its online travel properties into a new unit, called Travelport, which was then sold to the Blackstone Group (NYSE: BX).
And the dealmaking continued this week as Orbtiz raised a cool $510 million in an IPO. Unfortunately, investors were not impressed. The IPO was priced at $15, which was below its $16-$18 range. The stock then fell 3.3% on its first day of trading.
But the IPO proceeds won't go to Orbtiz. Rather, the cash will flow back to the parent company, Travelport (in a special dividend). In other words, the IPO is really a cash-out -- not a way to help build Orbitz.
True, Orbitz has some nice brands – such as CheapTickets.com and eBookers.com. But the fact is that the online travel space is highly competitive, with players like Expedia Inc. (NASDAQ: EXPE) and Priceline.com Inc. (NASDAQ: PCLN).
Another big issue: the company has never posted net income. So, I can understand why Wall Street has some concerns.
MOST NOTEWORTHY: MGM Mirage (MGM), USA Truck, Inc (USAK), Knightsbridge Tankers Ltd (VLCCF), Monolithic Power Systems, Inc (MPWR) and Stanley, Inc (SXE) topped out today's noteworthy upgrade list:
Prudential upgraded shares of MGM Mirage (NYSE: MGM) to Overweight from Neutral on valuation, as the firm believes the recent weakness presents a buying opportunity.
USA Truck Inc (NASDAQ: USAK) was raised to Equal Weight from Underweight at Stephens based on valuation.
Jefferies upgraded shares of Knightsbridge Tankers Ltd (NASDAQ: VLCCF) to Hold from Underperform to reflect the company's five vessels now operating on long-term time charter contracts and its recent entry into the dry bulk shipping sector.
Monolithic Power (NASDAQ: MPWR) was upgraded to Buy from Hold at Deutsche Bank following its patent win case against O2Micro International Ltd (OIIM).
Wachovia upgraded Stanley Inc (NYSE: SXE) to Outperform from Market Perform based on its strong Q4 report and guidance...
OTHER UPGRADES:
Cognos Inc (NASDAQ: COGN) was upgraded to Outperform from Sector Perform at Pacific Crest.
Priceline.com (NASDAQ: PCLN) shares are falling today after an analyst at Citi Investment Research reiterated his hold rating on PCLN and dropped his price target to $142, citing weakness in European travel. Citi also removed competitor Expedia (NASDAQ: EXPE) from its Top Picks Live list, cut the price target on EXPE as well. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on PCLN.
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Regular readers of BloggingStocks will find no shortage of stock picks for 2008 on our pages. Steven Halpern alone has compiled about 
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