We added a brand new 2% position to the Best Ideas portfolio today in highest-rated Economic Castle Priceline (PCLN) today. Specifically, we added 3 shares at the open price, $1,248.97.
The leader in global online hotel reservations is executing fantastically, and the firm’s valuation presents a material opportunity. Shares now register a 10 on the Valuentum Buying Index, and while we fully acknowledge the fundamental risks associated with an idea tied to cyclical end markets so late into the economic recovery, we think an adequate margin of safety exists.
The firm’s stock price is breaking through to the upside of its multi-month flagging pattern, and it now appears ripe for the picking. Investors should expect shares to be highly volatile in coming periods, and under weak market conditions even correct to $1,120 per share, closing the upside gap. Should that occur, we may add to the position. Priceline does not pay a dividend. This is a position in the Best Ideas portfolio.
We value the company’s shares north of $1,600 each. Priceline closed at $1,251.35 Wednesday.
This is a good time to review the characteristics of an Economic Castle, how it differs from traditional economic moat analysis, and why combining moat and castle analysis is a vital step in the equity research process. Please select the image below to begin — an except from part II of Valuentum’s four-part investment education workshop: