Expedia Inc (EXPE), Priceline.com Inc (PCLN): Are Travel Stocks Set to Take Off?

Competition is expected to be fierce in this space as more companies use social media and local services to attract eyeballs to their web sites. Google Inc (NASDAQ:GOOG) recently bought Zagat and Frommers in order to benefit from the increase in travel and to bulk up its local offerings. Travelzoo Inc. (NASDAQ:TZOO) and Yelp Inc (NYSE:YELP) are two other upstarts that are nipping at the heels of Trip Advisor. Each of these companies needs to continue to invest in their businesses to attract consumers (read eyeballs for advertisers), but Trip Advisor is a first mover in the space and savvy travelers typically rely on more than one web site when travelling a trip.

There is considerable disruption taking place in the travel arena in terms of demographics and global economics. 2013 is expected to be a boom year in travel as economies around the world are expected to recover from “The Great Recession.” Disruption breeds opportunities and all three of the companies highlighted in this article should benefit from the recovery in travel spending.

All 3 of these stocks have had good gains in the last 6 months, but should continue to chug along in 2013 and bring decent market-beating returns to shareholders given the projected economic conditions. In addition, the demographics of the industry should be very good in the next 5-10 years as the Baby Boomer generation retires from the workforce and embarks on those long-awaited dream trips. Despite some valuation concerns, all three companies, Expedia, Priceline and Trip Advisor should offer market-beating returns for the next few years.

The article Are Travel Stocks Set to Take Off? originally appeared on Fool.com and is written by Erick Santos, M.D., Ph.D..

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