Can Expedia Replicate Outstanding 2012 Results?

Travel agencies are competing for a slice of a shrinking industry and the battle is now wagered online, where Expedia (EXPE) has established a strong foothold. While it is still trailing market leader Priceline (PCLN), the company has achieved remarkable results in 2012 and is one of the stocks that binary options traders should pay attention to. The stock has doubled its worth in a bit over a year, which explains why investors are suddenly bullish towards a company that used to fly below the radar.

Is this kind of growth sustainable?

Assuming that Expedia will perform at least as well in 2013, we would be tempted to believe that another doubling up is in order and there are some arguments in favor of this theory. The internet is truly the final frontier and Expedia has an outstanding business model that makes it the first choice for those who use the Internet for booking tickets. Now that they have also increased international operations, prospective customers have even more reasons to use their service.

One way of replicating 2012 performance is by further consolidating its position in the OTA industry, something that Expedia diligently does. It acquires smaller companies and tries to buy its way to the European and Asian markets, where the number of international travelers has increased. While all these arguments are in favor of binary options traders willing to buy call options, there are some potential perils that need to be taken into account.

What could stall Expedia stock

There is one downside caused by the recent surge in stock price, as traders are now right to regard Expedia as expensive stock. It trades above the industry average and it has a low dividend yield, which makes people think twice about whether it is wise to purchase Expedia or not. The competition is increasingly intense in this industry and now that new players such as Google (GOOG) and Facebook (FB) have entered the race, it is about to be taken to a whole new level.

Expedia does a great job in staying up to date with technology, but with these new players entering the game it might be very difficult to get the upper hand. Last but not least, the inability of maintaining a stable margin and the sub-par revenue growth are also arguments against Expedia doubling up again. Binary options traders should trust this stock and call options still make perfect sense, but should refrain from making risky bets based on 2012 results.