What Is Fueling the Boom in Online Travel Stocks?

Orbitz (OWW) Makes Money Despite the Recession

Proving that Expedia isn’t just a fluke among online travel companies, on Aug. 6, shares of Orbitz Worldwide (OWW)
blasted 23% higher after the company reported a profit of 10 cents per share. That number trounced the consensus forecast for a loss — yes,
a loss — of 6 cents per share. Orbitz said that although gross bookings were down 12% year over year, they were up 22% from the first quarter.
The quarterly increase in bookings, along with an aggressive cost-cutting campaign, helped to offset a net revenue decline of 19% year-over-year.

This phenomenon of beating bottom-line earnings even though top-line numbers are down has been ubiquitous in the second quarter, so to see this
in Orbitz’s report is really nothing too unusual. That’s not to say that I wouldn’t have rather seen Orbitz post strong top- and bottom-line numbers,
but the point here is that the company is making money despite the wider recession.

In the price chart here of OWW shares, we see the stock trading above both the short-term, as well as its long-term moving averages in much the
same way as Expedia shares are. Once again, these are two technically bullish signs for Orbitz going forward. One point of worry here, however, is
that OWW shares spiked so high after that Aug. 6 announcement that they may be way overdue for a pullback. Year-to-date, OWW shares are up 70%, with
much of those gains coming since mid-July.

Next – Priceline Continues to Wow the Street