Among the keenly watched stock market news is the ranking of the stocks that are published by the mega fund manager grouping. This consortium is the mutual fund industry’s way of announcing to investors about the stocks to watch out for in the coming year. This year, the focus has been on E-Commerce companies that have a significant presence in the online retail market offering everything from portals where you can buy goods and services virtually to travel gateways and discount shopping sites. Among the top picks of the mega fund managers this year has been the travel e-commerce portal and company, Expedia. For the uninitiated, the top mutual funds usually bet on the stocks whose fundamentals are strong and hence, there is every reason to believe that Expedia is indeed a good investment.
The other e-commerce companies that the mega fund managers seem to trade heavily and are optimistic about include Amazon, Priceline.com, Liberty Interactive Group and the Chinese company CTrip.com. While the street has always been bullish on Amazon given its rather solid business model and its unparalleled shopping experience for online users, the inclusion of a Chinese company has surely raised a few eyebrows. This is because Chinese online portals are usually operated according to local conditions to the extent that their sites are in Mandarin and no other language. However, given the increasing relevance of China to the global economy and the fact that Chinese companies are slowly going global, it is not really farfetched to envisage this company to be in the good books of the fund managers.
Returning to Expedia, it is pretty obvious for stock aficionados when the charts are analyzed as to why this company remains the darling of the market movers. First, the company has beat analyst expectations for its revenue and profits and has given a guidance which is aggressive in its outlook. Further, the fact that the travel business worldwide is shifting into online modes gradually, it makes sense for investors to own the Expedia stock both because of its existing base of customers as well as the potential ones who look for good deals online. Not surprisingly, the other travel site on the list, CTrip.com is similarly on a high growth trajectory given the robust market conditions for the travel business notwithstanding the ongoing recession.
Finally, Expedia has ambitious plans for the coming years and is poised to reap the benefits of its strategy once the economy improves. Indeed, the company has dug deep during the tough times and has managed to grow more than 60% YTD (Year to Date) which is a sign of the strong fundamentals. Added to this is the easy money that is flocking to the markets in search of good stocks. A word of caution here: It is better to stick to stocks like Expedia that have good numbers and not get swayed by volatile stocks that are purely speculation driven. This is the main reason the mega fund managers’ advice is well worth heeding.