The stock market has already factored in the challenges facing the travel and retail sectors into Priceline’s stock price, Reuters and Barron’s both reported.

According to Barron’s, as the current financial crisis deepens, consumers are going to devote an increasing amount of time to their personal and household spending budgets – a point that Money Morning has repeatedly made as part of its ongoing “Credit Crisis Safety Plays” series. As those consumer concerns about spending and household budgets increase, Priceline’s name-your-own-price business will become a bigger draw, Barron’s, the popular investing weekly, said in its most recent edition.

Barron’s also said Priceline has little debt and plenty of cash on its balance sheet, including $282 million in free cash flow this year. At Friday’s closing price of $54.57, Priceline was trading at 8.8 times projected profits for 2009. That’s well below the average Price/Earnings (P/E) ratio of 21 for Internet retailers, and 9.0-plus for the travel and leisure sectors, Barron’s reported.

Priceline also has a tendency to report upside earnings surprises. In each of the past four quarters, the Norwalk, Conn.-based Priceline has beaten analyst estimates by amounts that range from 9.9% to as much as 27% (Please see accompanying chart).

Strategy Shift a Major Plus

According to noted travel writer Arthur Frommer, Priceline.com was largely once just “a rather exotic service meant only for the gamblers among us – the folks willing to accept the risk of a 6 a.m. flight or an out-of-the-center hotel. By featuring its bidding process (‘name your own price’), Priceline.com came up with absurdly low air or hotel rates, but with the drawback of sometimes producing a dawn departure, a multi-stop flight or a badly located hotel.”

But that’s changed. In a story he penned for TheLedger.com, Frommer said that while Priceline “still maintains its ‘name your own price’ option – the way to get the very lowest prices imaginable - it now also offers the same full-disclosure airfares and hotel rates that Web sites like Hotels.com, Expedia.com (EXPE), Travelocity.com, Orbitz.com (OWW) and others offer.”

The bottom line: Priceline.com often beats the prices offered by these other “full-disclosure” Web sites – and without charging the extra fees that these other sites hit users with, Frommer wrote.

The economic slowdown may also benefit Priceline. The financial crisis has hit the travel sector and the airlines hard. So the major airlines are now using Priceline.com as a way of disposing of their unsold seats – “of which there are a great many,” Frommer wrote. But that’s good news for the more-adventurous traveler, since the “last-minute” airfare deals feature has returned to the Priceline.com Web site, Frommer said.

Priceline is now going global. With its recent acquisition of European hotel search engine called Booking.com, Priceline.com is also has become a standard full-range search engine for hotel rates both in the United States and abroad. Booking.com is the largest of the hotel booking sites in Europe, meaning users will find offers from some of the “more interesting, nonchain, boutique-like hotels that are often absent from American hotel search engines.”

Master Marketer

When it launched its somewhat campy television ad campaign, Priceline.com was smart enough to go after the king of camp himself – Shatner, whose entire TV life has been spent playing such campy characters as Capt. James T. Kirk (Star Trek), police Sgt. T.J. Hooker (T.J. Hooker) and legal legend (in his own mind) Denny Crain (Boston Legal). Shatner’s performances as the “Priceline Negotiator,” have spawned kudos both for Shatner and for Priceline.

Curiously for Shatner, however, it’s original “Star Trek” series veteran Leonard Nimoy (Mr. Spock), and not the irrepressible Shatner – described by one writer recently as the “master of the strained staccato delivery” who landed a role in the new Star Trek (2009) movie due out next year.

But Shatner does have a new talk show starting: Shatner’s Raw Nerve debuts Dec. 2 on the Bio Channel, media reports state.

Source: Hot Stocks: Priceline.com Shares Poised to Beam Up, Barron’s Says

“Hot Stocks” is a new Money Morning feature that analyzes the investment outlook of global companies that are in the news. This is the fifth installment of this ongoing investment series

This from Investment U:

Look at every investment disaster individual investors have endured throughout history and the cause is virtually always the same. They neglected to ask a simple question: What if I’m wrong?

• Take the guy whose retirement account is loaded up with shares of one company, the same one he works for. He exposes himself to a career downturn and an investment disaster at the same time. He forgets to ask, “What if I’m wrong?”

• Or the woman who buys an investment property in a hot market, taking out a mortgage she can barely afford. What if she’s wrong?

• Take the trader who loads up on call options, trades heavily on margin or bets the farm on the bull market in oil continuing. What if he’s wrong?

Of course, every investor can be wrong. We all are occasionally. Successful investing is about taking – and intelligently managing – risk.

We Know The Future Is Unknowable At Investment U

We at Investment U are well aware that to a large extent the future is unknowable. So despite our well laid plans, we always hedge our bets.

That means buying quality, diversifying broadly and running trailing stops behind each of our individual stock positions. Anyone who has done that over the past 12 months is miles ahead of the average investor.

As the old saying goes, “The winner in a bull market is he who makes the most. The winner in a bear market is he who loses the least.”

Although we’re in a bear market now, the time has already come to start looking ahead.  Investment legends like Warren Buffett and Mark Mobius know this. (They have the benefit of a well-informed investment perspective.) Your average talking head, apparently, does not.

For instance, there have been six major bear markets over the past 80 years. The average decline in the Dow Jones Industrial Average of the previous five disasters – from peak to trough – was 43%.

That’s just about the low point of the current bear market. Unless we’re about to enter a “Greater Depression,” we’re a lot closer to the bottom than the top.

Scared Investors Are Missing the Easy Investment Opportunities

And there are investment opportunities galore, although most investors are too scared to move on much of anything.

• Many of them are tucked safely away in T-bills, where they can sleep soundly at night. But is the purpose of your investment portfolio to provide for you and your family in retirement or is it to play Brahms’ Lullaby?

• Many of these investors have deluded themselves that they will wait until the coast is clear of any investment disasters and then safely re-enter the market down the road.

In other words, having failed to see the top of the market – like 99.9% of all investors – they are now confident they can pick the bottom.

What if they’re wrong? What if the market is already discounting a severe recession? They run the risk of sitting in cash, collecting a pittance, when the market starts to rally again in earnest.

13 Companies At Bargain Basement Levels – For Starters

Meanwhile, there are plenty of companies out there trading at bargain basement levels. If you don’t have much faith in near-term earnings, try a different tack. Buy a few companies that are loaded with cash.

Which ones? Well, for starters, there is:

• AutoDesk (NASDAQ:ADSK)

• Amdocs (NYSE:DOX)

• Dell (NASDAQ:DELL)

• Expedia (NASDAQ:EXPE)

• Foster Wheeler (NASDAQ:FWLT)

• NCR (NYSE:NCR)

• Cisco Systems (NASDAQ:CSCO)

• BMC Software (NYSE:BMC)

• McDermott International (NYSE:MDR)

• Hewlett-Packard (NYSE:HPQ)

• Intel (NASDAQ:INTC)

• Nike (NYSE:NKE)

What if I’m wrong? What if these cash-rich companies go down in the near future, too?

That’s always a possibility.

Limit Your Downside Risk With Trailing Stops

But if you use our recommended 25% trailing stop, you’re not just buying cheap… you’re strictly limiting your downside risk.

The investor holed up in cash, on the other hand, is earning a meager 2% or so on his money.   He may not reach his investment goals. But he sleeps well… and he feels safe.

What if he’s wrong?

Source: What If You’re Wrong?