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Priceline, Orbitz Soaring -- But Could Experience Turbulence


Second-quarter performance bodes well for future growth.

One to watch: Priceline (PCLN) put a smile on spokesman William Shatner's face this morning, opening at a fresh 52-week high after reporting second-quarter EPS of $1.38. Revenues rose almost 18%, and its CEO said leisure travel demand in the peak summer season was "stronger than expected."

The company, whose shares benefited from a brokerage upgrade last week, is experiencing good volume growth: Clearly more customers are heading across the waves as fees are waived. The sector is in a sweet spot -- competitor Orbitz (OWW) was among the NYSE's biggest percentage gainers last week. With moderating currency headwinds and first-mover advantage in Europe and Asia, Priceline is well placed for future growth. One caveat: The stock certainly isn't cheap, and has always been a bit of a roller coaster for investors.

What just happened: Last week stocks partied like it was 1999, or 2000 (.25) in the case of Nasdaq which ended at that technically important milestone. The S&P closed above 1,000 for the first time all year while the DJIA reached a peak last seen around election day. Crocs (CROX) stock skyrocketed 60%; imagine if the company cured cancer instead of merely churning out colorful clogs. Suddenly profitable AIG (AIG) regained large cap status. The Royal Bank of Scotland (RBS) did nothing for that nation's reputation for thriftiness by revealing a first half loss of $1.7 billion. It was still better than the performance posted by America's second biggest employer - the US Postal Service announced a $2.4 billion loss in its most recent quarter.

What's happening: Asia ended up following Friday's better than anticipated US payroll report. Europe is off on a bout of profit taking. Here at home equities have opened lower and the dollar is down to its lowest levels of '09.

What will happen: It's all quiet on the economic front. Dow component McDonald's (MCD) just announced stronger than expected July sales. We'll be learning about earnings from Allied Capital (ALD), Century Casinos (CNTY), Clear Channel (CCO), Constellation Energy (CEG), Dish Network (DISH), Dynegy (DYN), EchoStar (SATS), Fluor (FLR), Healthcare Realty Trust (HR), Morgans Hotel Group (MHGC), Quest Software (QSFT), Stifel Financial (SF) and Vitesse Semiconductor. Sysco (SYY), the foodservice outfit is also due to release results - hopefully they'll be better than those reported last week by Cisco (CSCO) the tech titan.

Happenstance: To coincide with the stock market's recent rise, Who Wants to be a Millionaire returned to prime time last night a decade after its debut. For what it's worth the show saw its ratings crest in 2000, along with the Nasdaq. Meanwhile airing on another channel was a show which says more about the still precarious state of our economy. Pawn Stars tells the tale of shady loan sharks currently enjoying their moment in the sun.
No positions in stocks mentioned.
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