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UBS's 4 Top Online Travel Stocks With Big Upside Potential

The online travel industry is a growth vehicle that continues to chug away as the old travel agency days become a distant vision in the rear-view mirror. Online travel has not only made the entire process easier for consumers, it has brought competition more into the picture, which has helped to lower prices.

A new report from the U.S. Internet and Interactive analysts at UBS includes some of the results of a conference call with Airbnb’s former head of International Operations that discussed implications for hoteliers and the online travel space. Airbnb is a website for people to rent out lodging. It has more than 500,000 listings in 33,000 cities and 192 countries. The results of a survey commissioned by Airbnb were extensive, and one thing is for sure. The online travel space will continue to see heated competition.

Here are the four online travel stocks at UBS that are currently rated at Buy.

Expedia Inc. (NASDAQ: EXPE) has absolutely exploded pricewise over the past year, and more gains are expected, especially after the company has picked up the pace in television advertising. Expedia provides travel products and services to leisure and corporate travelers, offline retail travel agents, and travel service providers through a portfolio of brands, including Expedia.com, Hotels.com, Hotwire.com, Expedia Affiliate Network, Classic Vacations, Expedia Local Expert, Egencia, Expedia CruiseShipCenters, eLong and Venere.com.

Expedia investors are paid a 0.8% dividend. UBS has a $95 price target, and the Thomson/First Call consensus target for the stock is $88.96. Expedia closed Wednesday at $85.35 a share.

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HomeAway Inc. (NASDAQ: AWAY) is the world’s largest marketplace for vacation renting, with a total of 890,000 paid listings on its system. The UBS team sees the stock as primed for a turnaround as it has underperformed huge this year, and the perceived competition from other outlets may not prove to be as strong as first thought. The stock has been mauled and is down more than 30% since the beginning of the year.

UBS has a $40 price objective on HomeAway, and the consensus target is slightly higher at $41.07. The stock ended Wednesday’s trading at $33.

Orbitz Worldwide Inc. (NYSE: OWW) is one of the names that the UBS team sees very little front-end risk in, as it posted solid second-quarter earnings numbers, and the latter part of the busy summer travel season appeared to be very strong. While Orbitz no longer has an exclusive relationship with Kayak, which rival Priceline bought, to help drive results, the company is benefiting from a large uptick in online spending in the travel industry.

The UBS price target for Orbitz stock is $11, and the consensus is set at $9.58. Shares closed trading at $8.13.

Priceline Group Inc. (NASDAQ: PCLN) is one of the highest rated Internet stocks on Wall Street, with a strong 4.7 rating out of 5 by all analysts covering the stock. The company stumbled just briefly when earnings were released this summer showing slowing growth. Priceline has quickly rebounded as many of the analysts covering the online travel giant noted that it beat earnings estimates and gave forward guidance above expectations. Most on Wall Street agree that the growth potential remains and see several long-term potential catalysts.

The UBS price target for the travel giant is a whopping $1,500. The consensus is almost in-line at $1496.20. Priceline shares closed Wednesday at $1173.20.

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The easier and more secure that the online travel experience has become, the more consumers have shifted to using it. If the economies around the world finally start to show some consistent growth in 2015, the four stocks to buy at UBS may see outstanding growth and revenue.

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