HomeAway (AWAY) engages in the provision of an online marketplace for the vacation rental industry. It has a market capitalization of $2.04 billion and shares of the company are currently trading at around $25 per share. It generated a profit margin of 2.7% and a return on equity of 1.5% last year.
HomeAway has a gross margin of 85% while its competitor, Priceline.com Inc. (PCLN), has a gross margin of around 69%. HomeAway’s operating margin of 9.8% is higher than the industry average of 4%. Aspen Technology, Inc. (AZPN) has a price-to-sales ratio of 9 times while HomeAway is slightly cheaper with a price-to-sales ratio of 8.9 times. HomeAway has a five-year expected PEG ratio of 1.65 times while Aspen’s ratio is negative 14.4 times. HomeAway is currently spending a large amount to ensure that its growth increases. While this move may lead to lower earnings in the near future, we believe that the company is expected to recover its expenditures in the long run.
LinkedIn (LNKD) is an online professional network that allows users to create their professional profile and build a network. It has a market capitalization of $8.9 billion and shares of the company are currently trading at around $91 per share. It generated a profit margin of around 2.3% and a return on equity of 3.2%.
LinkedIn currently has a significantly higher gross margin of 84.4% as compared to Monster Worldwide, Inc.’s (MWW) gross margin of 50.3%. Its operating margin of around 5% is higher than the industry average of 4%. LinkedIn has a lower five-year expected PEG ratio of 1.44 times versus Monster Worldwide’s ratio at 2.2 times. With a large number of members and a higher-than-average income, LinkedIn is a favorite among many investors. It also recently acquired Rapportive, a company that makes software for social media integration. This acquisition will help decrease LinkedIn’s development expense over time.
Spirit Airlines (SAVE) is a provider of passenger airline services. It has a market capitalization of $13 billion and shares of the company are currently trading at around $19 per share. It generated a profit margin of 7% and a return on equity of 45.3%.
Spirit Airlines has a gross margin of 27.7% and an operating margin of 13.8%. AMR Corporation (AAMRQ), on the other hand, generated a gross margin of 19.7% and an operating margin of negative 1.2%. Spirit Airlines has a lower price-to-earnings ratio of 13 times versus the 17.2 times shown by another competitor, JetBlue Airways Corporation (JBLU). Spirit Airlines also has a lower five-year expected PEG ratio of 1 time versus JetBlue’s ratio at 1.3 times. Spirit is a low-cost airline with high analyst rankings. It recently added Denver to its flight destination and has seen an increase in its earnings. We see potential and recommend investing in the stock.
Zipcar (ZIP) is a car-sharing network that provides its members with services in metropolitan areas and university campuses. Its shares are currently trading at around $13 per share and the company has a beta of 0.3, indicating relatively low instability in share price.
Zipcar has a five-year expected PEG ratio of 2.25 times, which is greater than that of its competitor, Standard Parking Corporation’s (STAN) at 1.5 times. Furthermore, Zipcar has shown great top and bottom-line growth. It is on its way to big highs with an added inclusion of an investment in peer-to-peer sharing. Zipcar’s financials indicate that the company is definitely headed in the right direction and buying stock now would be a wise decision.
Responsys (MKTG) provides on-demand software and other professional services. It has a market capitalization of $0.58 billion, and shares of the company are currently trading at around $12 per share. Responsys generated a profit margin of around 9% and a return on equity of 12.7%.
The company’s operating margin of 12.7% is higher than the industry average of 8%. Ansys Inc. (ANSS) is a competitor of Responsys. Ansys has a price-to-sales ratio of 8.8 times while Responsys has the same ratio at 4.4 times, indicating that the shares of Responsys are cheaper. The stock has been rising on usual volumes and we recommend buying the stock now, before it reaches its peak price.