Tripadvisor Inc (TRIP), OpenTable Inc (OPEN), Shutterfly, Inc. (SFLY): 3 Web-Based Businesses That Profit From Leisure

Page 1 of 2

You travel, you dine out, you take pictures… you spend money. This is my list of Internet services related to leisure activities: Tripadvisor Inc (NASDAQ:TRIP) is used for voyages, OpenTable Inc (NASDAQ:OPEN) is used to eat out and Shutterfly, Inc. (NASDAQ:SFLY) is used to keep the memories alive. These three companies beneficiate from increasing disposable incomes around the world and an ever-growing use of the Internet as a research, reservation and retail option. The companies therefore offer plenty of upside for investors, for the years to come. Below you will find a succinct analysis of why I believe that these firms offer good long-term investment opportunities beyond their valuations.

TripAdvisor: Online travel agency

Tripadvisor IncTripadvisor Inc (NASDAQ:TRIP) is an online travel agency and research company that operates worldwide under different web domains. The website’s main differentiator and attractive is its review database that comprises over 60 million user opinions on travel related issues. By centralizing a wide array of services, the firm has put together a hard-to-match offering that results in over 50 million users visiting the company’s websites each month. With so many users willing to spend money traveling, revenue sources are varied and range from advertising to travel vendors and agents like Experia.

Although the company is expected to perform weakly over the next couple quarters while it finishes itstransition to the meta-display feature, several other elements should drive growth in the longer term. Namely, a strong brand name and client base; a constantly growing review base and product offering; and a renewed user experience. The mobile segment should also contribute to revenue growth in the years to come, although hefty investments will impact on short-term profitability.

Additionally, the increasing travel-related Internet traffic, corporate spending on advertising and use of the Internet in emerging countries -especially in Asia-Pacific and Latin America- should provide further growth opportunities.

Although overvalued in relation to its industry, I’d recommend BUYING and holding on to this stock, since analysts expect Tripadvisor Inc (NASDAQ:TRIP) outperform its peers’ earnings-per-share growth rates comfortably. Offering great returns, margins and cash generation capabilities (about 30% of revenue is converted into free cash flow each year), this company should deliver plenty of upside for those willing to wait.

Shutterfly: Social & personal services

Shutterfly, Inc. (NASDAQ:SFLY) is an “Internet-based social expression and personal publishing service that enables consumers to share, print and preserve their memories” (Morningstar). With a market capitalization of $2 billion, this company has been catching the eye of investors for a few quarters now. Two factors have dissuaded many from buying this stock lately, however. First off, its valuation: trading at 98 times its earnings, these shares look quite expensive. In the second place, its weak guidance for the 2013 fiscal year discourages most short term-investors.

Nevertheless, long-term prospects look pretty promising: analysts expect earnings per share to grow in the 16% to 20% range each year over the next five. There are several other reasons to feel optimistic about this company and to BUY AND HOLD its shares as well.

Over the next few years, its revenue and earnings should continue to grow on the back of its market leading position and constantly expanding client base. Several acquisitions will also help diversify Shutterfly, Inc. (NASDAQ:SFLY)’s product offering, helping attract a wider array of customers. Some of the most recent purchases include Kodak Gallery´s online photo services, Fuji Film´s SeeHere.com photo-sharing website, Penguin Digital and WMSG. Strategic partnerships will play an important role in future growth as well, as proven by those with Groupon Inc (NASDAQ:GRPN), Best Buy Co., Inc. (NYSE:BBY), Target Corporation (NYSE:TGT) and Walgreen Company (NYSE:WAG), among others.

Diversification will also come from within; several initiatives, like Treat, its one-to-one greeting card service, and mobile-related services, are also expected to deliver plenty of additional revenue.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!