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Booking Holdings $BKNG Investment thesis
We have initiated a position in Booking Holdings $BKNG. Below is a summary of our investment thesis with the most important factor being its valuation:

  • After being hit by the pandemic during 2020-2021, the online market for travelling and accommodation is recovering. According to Business Wire, Global Online Travel Market Size is projected to be US$ 1,464 Billion by 2027, from US$ 801Billion in 2021 (CAGR of 10.6%).

  • Online travel agencies (OTA) like Booking will be one of the beneficiaries of of this trend. Early signs of recovery appeared with GBVs of major OTAs surging to all-time highs due to increase in nights booked and increase in Average Daily Rates (ADRs). For example, Booking had Q1’2022 GBV of $27.3B, up 129% Y/Y and up 7% from Q1 2019. Airbnb had GBV of $17.2B, up 67% Y/Y and up 73% from Q1 2019.

  • Booking is a leader in OTA market. For example, its market share in Europe in 2019 was 67.7% according to Statista. Global wise it generated the highest revenue in US$ billion for 2019 and 2020. Also the large number of hotel listings on Booking creates a network effect and acts as a barrier for new entrants in OTA. For instance, in 2021, 590 million room nights were booked across Booking Holdings. This is below the pre-pandemic 2019 figure of 844 million which is explained by the fact that the market has not fully recovered.

  • Heavy share buybacks over the span of the last 10 years. Total shares have been reduced from 49.9M in 2012 to 41.1M in 2021. This approximates to $23B of share buybacks compared to cash generated from operations (over the same period) of approximately $32B. Around 70% of the cash generated from operations were returned to shareholders, without disrupting the business from growing.

  • Optionality: Other than accommodation/lodging choices, Booking offers the option to book a flight, to rent a car, to book a visit to an attraction or activity and to book an airport taxi transfer. Needless to say, but you can also use your Genius discount on certain items.

  • Valuation: Analysts expectations for 2026 EBITDA average at $10.1 billion, whereas in our valuation we use an EBITDA of $8.9 billion. Assuming a multiple EV/EBITDA of 18 (in line with 2015-2019 average) we reach an Enterprise Value of $160.6 billion (difference is due to rounding) compared to today’s EV of $80.8 billion. Potential IRR on EV terms is around 16.5%.
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Thanks🙏. Yes we are planning to release a head to head analysis for $BKNG and $ABNB . To be clear we are not saying that $BKNG is better business than $ABNB. We just feel more comfortable with the valuation of $BKNG
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Shared Research Screens:
Value Line Top 100 Highest Growth
I’ve always seen excerpts in books touting Value Line as a valuable source of research analysis, but had never looked at subscribing. They’d always mentioned it was available at local public libraries free of charge. I don’t pay for investment advice like I don’t pay for women, so off to the library I went. I was shocked when the librarian showed me the giant binders of already crunched numbers of everything I’d ever wanted and more!
I said I was going to start sharing research screens weekly, but due to the backlog, I need to spit a few out a little quicker while valuations are still accurate & relatively attractive.
This first list started with a list of Value Line growth companies, 100 of them. I had to narrow the list somewhat, without my bias, so I used their provided statistics to cull the best investable options from the original list of their Top 100 Highest Growth Stocks.
The reason this quality growth screen jumped out at me in the first place was the qualifying criteria, eliminating most of the risk of making a bad decision (based on emotion or hype).
Value Line quote: “To be included, a company’s annual growth of sales, cash flow, earnings, dividends, and book value must together have averaged 10% or more over the past 10 years and be expected to average at least 10% in the coming 3-5 years.”
That says a lot about the stability, strength, & trajectory of a company and that’s the type of near zero risk, sleep well at night (SWAN) stocks I like to own. Especially when they’re undervalued or out of favor, just reported a bad quarter, or trading at historically low valuation multiples for any other myriad reasons.
Statistical categories included in this Value Line table include 1) Timeliness Rank, 1 being best time to buy, 5 being the worst, 2) Safety Rank, 1 being safest, 5 being the riskiest, 3) current P/E ratio, 4) estimated 3-5 year price appreciation, and 5) the company’s industry rank. I’ve chosen to personally eliminate all fortune telling/future predictions/economic forecasts, etc. from my analysis, therefore will exclude forward looking estimates whenever possible. To narrow the list from the top 100 to a more manageable list of the cream of the crop, I chose to look for company’s with a Timeliness & Safety rank of 1-2 to ensure highest quality & fair value/positive outlook, a P/E ratio below 30 to ensure I’m not paying too high a price, and top 10 rank in their industry to hopefully provide additional quality/moat/competitive advantage strength to the final contestants on #INVESTWITHDEEBO. Ensuring quality first, and value second, hasn’t failed me yet.
Turns out, only 2 companies met such high standards, so I had to relax criteria just a tad. Those two companies were Google and Microsoft ($MSFT just barely, with a P/E of 30.xx) Google was the sole company with an absolutely perfect score; 1 on Timeliness & Safety, P/E ~20, ranked #3 in their industry. And had +100% 3-5 year estimated price appreciation to boot.
So, relaxing the standards, I was able to get almost 25 company’s I think provide higher probability of outperformance going forward, although I don’t believe there’s a bad company on the list.
Value Line Top 100 Highest Growth Stocks; additionally screened for my 4 additional quality & valuation hurdles (timeliness, safety, P/E, industry rank) produced the following:
Hitting a perfect 4/4 parameters:
$GOOG
$MSFT
An exceptional 3/4 Parameters:
$TSM
$LOW
$AMZN
$AVGO
$FISV
$ADBE
$AAPL
$BKNG
$INTU
$ON
$SBUX
Still great 2/4 Parameters:
$LAD
$TMO
$NFLX
$MA
$NVDA
$SWKS
$AMAT
$KLAC
$LRCX
Couple Honorable Mentions that narrowly missed the expanded standards:
$CDNS
$MED
The reason I love screens like this is because every one of these 100 companies is a strong company. Starting with a high quality list, then further screening for quality & valuation from there, has drastically reduced the probability of making a bad investment. Unless I get my emotions involved, then I take an L occasionally. So I try to keep it as near 100% mechanical as possible. I understand the voting machine vs the weighing machine; price will always follow performance, may just take a bit for the herd to catch up😉
Sorry again for the forward looking estimates, I’m keeping them at a minimum, promise.
After doing this for hours today, I wanted to score them to give more of an idea on which I thought might provide the most upside. So I spent hours today developing a point system based on the quality & valuation metrics already discussed, plus quality, profitability, valuation metrics & margin of safety estimates from 3 of my most trusted & accurate data sources. The primary reason I wanted to do this, was because to take advantage of the most irrationally priced stocks, doesn’t always require us buying the best companies. So this scoring system gives points ranging from 5-25 per category, for 6 additional categories of quality, value, & MoS. Higher quality rank= more points, larger margin of safety=more points. This scale (admittedly with 100% personal emotion and bias) was intended to reward the companies that 1) hit the most parameters, and 2) had the largest margin of safety, therefore minimizing downside risk to an absolute minimum, while simultaneously increasing the probability of outperformance. So here is the same list, in order of points scored, on my totally made up point scale, to hopefully provide some context as to the level of undervaluation.
The points for all criteria equaled a possible total of 165 points. This would be a dream stock at a dream price. Google is the ONLY company to pass every single criteria every single step of my analysis today. Taiwan Semiconductor only scored slightly higher because the estimates for MoS were much deeper for $TSM than $GOOG. So even though they got 0 points on one indicator, they made up for it with more points for MoS. Google scored points as a top ranked candidate (top 25% of companies at time of comparison) in every single category. I’d have to dig through an entire notebook to count the data points that went into this 10 hour waste of a day, but Google scored perfect at every step. But with MoS estimates of only 6%-16%, this is a classic Buffet, “wonderful company at a fair price”. So here is my totally biased list of quality companies trading at fair or below fair value.
$TSM 125
$GOOG 120
$LAD 120
$NFLX 110
$SWKS 110
$MSFT 100
$ON 95
$LOW 95
$AMZN 90
$AMAT 90
$TMO 95
$AAPL 85
$ADBE 80
$AVGO 80
$FISV 80
$INTU 75
$MA 75
$NVDA 75
$KLAC 70
$LRCX 70
$SBUX 65
$BKNG 40
Remember, this is not a quality ranking. This list weights margin of safety equally with other metrics. The companies at the bottom of this list are great, just not as much probability of upside compared to more undervalued/out of favor stocks at the top of the list.
Hope this provides some SWAN stocks for other value, or growth at value, investor’s out there🤙
PS: Craziest part of seeing the results of this list, since it was just made today, is that I have actually opened positions in $TSM, $GOOG, $NFLX, $MSFT, $AVGO, $NVDA, $KLAC, & $LRCX in the last 30 days, based on my own analysis of what’s important. I don’t feel 100% confident just because any specific source agrees; but I feel comfortable trusting my outside data sources as 2nd opinions based on the experience I’ve had using them over the last few years. Never hurts to find more reasons to want to buy, or maybe avoid, a specific company.
This is one impressive post! Really appreciate all the time and effort you put in. Nice to see $GOOG make it to the top list but also there any a few companies that I need to check out since I never seen this tickers and maybe there some hidden gems for myself to explore more on!

Appreciate all the work you put into this
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StockOpine's avatar
$21.5m follower assets
$BKNG or $ABNB
Which accommodation stock do you go for?
15%Booking Holdings Inc
84%Airbnb Inc
13 VotesPoll ended on: 05/13/22
Top Gainers Today @ 10am
Top Gainers Today: $MSFT, $V, $MA, $BABA, $BHP, $BKNG, $JD, $FCX, $PDD, $DDOG, $RIVN, $GFS, $NIO, $CSGP, $ENPH, $LI, $TECK, $ZTO, $BEKE, $TER
Visit highsandlows.substack.com to see more

$MSFT - Microsoft Corporation - Software - Infrastructure - $2116.95B - %Chg: 5.67%

$V - Visa Inc. - Credit Services - $441.16B - %Chg: 9.88%

$MA - Mastercard Incorporated - Credit Services - $349.87B - %Chg: 8.21%

$BABA - Alibaba Group Holding Limited - Internet Retail - $234.87B - %Chg: 5.55%

$BHP - BHP Group Limited - Other Industrial Metals & Mining - $180.69B - %Chg: 5.03%

$BKNG - Booking Holdings Inc. - Travel Services - $89.83B - %Chg: 5.30%

$JD - JD.com, Inc. - Internet Retail - $83.80B - %Chg: 8.56%

$FCX - Freeport-McMoRan Inc. - Copper - $69.60B - %Chg: 5.70%

$PDD - Pinduoduo Inc. - Internet Retail - $46.68B - %Chg: 9.67%

$DDOG - Datadog, Inc. - Software - Application - $41.65B - %Chg: 5.30%

$RIVN - Rivian Automotive, Inc. - Auto Manufacturers - $29.78B - %Chg: 5.30%

$GFS - GLOBALFOUNDRIES Inc. - Semiconductors - $27.60B - %Chg: 5.40%

$NIO - NIO Inc. - Auto Manufacturers - $26.55B - %Chg: 6.23%

$CSGP - CoStar Group, Inc. - Real Estate Services - $24.52B - %Chg: 6.95%

$ENPH - Enphase Energy, Inc. - Solar - $24.13B - %Chg: 12.10%

$LI - Li Auto Inc. - Auto Manufacturers - $23.31B - %Chg: 7.00%

$TECK - Teck Resources Limited - Other Industrial Metals & Mining - $21.86B - %Chg: 10.41%

$ZTO - ZTO Express (Cayman) Inc. - Integrated Freight & Logistics - $21.77B - %Chg: 7.80%

$BEKE - KE Holdings Inc. - Real Estate Services - $18.10B - %Chg: 6.25%

$TER - Teradyne, Inc. - Semiconductor Equipment & Materials - $17.99B - %Chg: 5.63%
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Leon's avatar
$850.8k follower assets
Portfolio end of February 202
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+wikifolio „Zukunftsbranchen“
I think it's time to buy the dip on $FSLY
Considering how poorly the stock has performed, the fundamentals are still good. Investors need to remember that the company is still in its growth stage and is continuing to invest heavily in sales. Right now, people are comfortable with their centralized cloud infrastructure services and many are hesitant about moving onto edge computing.

$FSLY is an edge computing platform that relies a lot on developers for adding utility to it. So far, the company has a couple of well-known clients like $SHOP $CRM $SPOT $NEWR $MSFT $ALK $BKNG $W $LYV and more.

Looking at Fastly's business model, while their revenues are subscription-based, many of their clients upgrade their subscriptions because they need more services to maintain their online presence. That in of itself is a big reason to remain long Fastly.

Furthermore, in their latest earnings report, there were a couple of good metrics:
  • The trailing 12-month net retention rate (NRR LTM) increased to 118% in the fourth quarter from 114% in the third quarter.
  • Dollar-Based Net Expansion Rate (DBNER) increased to 121% in the fourth quarter from 118% in the third quarter.
  • Annual Revenue Retention (ARR) was 99.2% in 2021 compared to 99.3% in 2020 showcasing world-class customer retention and revenue expansion.

If you want more clarification on those metrics, read here.

I admit, the company has seen its growth slow drastically. That's mainly why the stock has fallen out of favor with growth investors. During its high-flying days, the stock was trading at nosebleed valuations. Now, the valuations are. showing that $FSLY investors can start to reap a margin of safety.

What are your thoughts on Fastly? Do you think they'll rebound sooner or later?
February earnings
I think upcoming earnings are going to be really important in this volatile market. Companies will likely get punished (further) on even slightly bad results or outlook, and I'm hopeful strong earnings like we saw with $TEAM or $AAPL will buoy the overall market or at least software sector that I'm playing close attention to.

Personally, I have a handful of companies on my buy list including $CRM, $COUP, $ESTC, $SMAR, $POSH, but will only do so once they make it past earnings either scathed (lower price) or unscathed (peace of mind) :)

So we've put together our most anticipated earnings for all of Feb!


Keep an eye out!
1: $GOOGL $XOM $PYPL $UPS
2: $FB $ABBV $TMO $NVS
3: $AMZN $LLY $MRK $TNX
4: $BMY $SNY $REGN $ETN
7: $SPGI $SPG $GPN $TSN
8: $PFE $AMGN $BP $FISV
9: $DIS $CVS $GSK $CME
10: $KO $PEP $LIN $PM
11: $ENB $D $MGA $FTS
14: $SCI $ANET $OMCL $VNO
15: $ZTS $FIS $ECL $MAR
16: $NVDA $CSCO $EQIX $BIDU
17: $WMT $AMAT $SO $PXD
18: $DE $AEE $VTR $LBTYA
21: $UIS
22: $HD $BMO $MDT $BNS
23: $RY $LOW $BKNG $TJX
24: $CRM $AMT $ABNB $INTU
25: $EOG $OXY $PEG $CM
28: $JLL TGNA $LAZR $SAIL
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The Travel Sector Needs Corporate Travel Back
The travel sector continues to be hit by COVID-19. Almost two years into the start of the pandemic and most companies in the travel sector are still well-below their pre-pandemic levels. However, there's optimism among the industry executives that travel will come back strong in the coming year.

The latest Fincredible MacroTalk goes over what company executives are seeing regarding the demand for travel. Here are three quotes that stood out to me:

  • $HLT: “Business travel continued to gain momentum, with midweek occupancy and rates improving meaningfully versus the second quarter. In the quarter, business transient room nights were roughly 75% of prior peak levels. Studies show that nearly 70% of U.S. businesses are back on the road, up 28 points from the end of the second quarter. With roughly 80% of our typical corporate mix coming from small- and medium-sized businesses and with the lagging recovery of larger corporate travel, we've taken the opportunity to continue our work from before COVID to further increase our focus on this segment of demand.”

  • $ABNB: “On October 15, I believe it was that date that President Biden announced the reopening of the borders for international travelers come to the United States. Within 1 week of that announcement, we saw a 44% spike in nights booked for stays, crossing borders coming into the United States on Airbnb for stays November 9 and later, which is when the borders would open. So what we are seeing kind of across the board is evidence of pent-up demand.”

  • $DAL“We hear regularly from our corporate customers that they're ready to get back to travel, see their clients face-to-face to renew business relationships and develop new ones. That sentiment is coming through loud and clear in our most recent corporate surveys. More than 90% of our respondents mentioned that they expect travel volumes in the December quarter to either be the same or outpace September quarter. Nearly 60% of our accounts are telling us that they've already reopened their offices with an additional 10% expected to open their offices before year-end.”

It's clear that demand for leisure travel is strong. All of the quotes in the MacroTalk point towards pent-up demand for leisure travel. When allowed, people are going on vacation and traveling.

However, corporate travel is still lagging. The decision to travel or not is a lot more complicated for companies, which has resulted in muted demand for corporate travel this year. There's hope that next year the demand for corporate travel will pick up, but there's no guarantee it will. Without corporate travel, a lot of travel stocks face an uphill battle.

If you'd like to read the whole post, here's the link: Fincredible MacroTalk December 15: Travel Demand.
Includes quotes from: $MAR $HLT $WH $MTN $ABNB $DESP $EXPE $BKNG $AAL $DAL $UAL $CPA $TRVG
Hi Alberto this is a great memo ! I am curious to know which companies you believe are best equipped for the uphill battle if corporate travel were to take longer to pick up?
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