- RBC Capital praised the two stocks
- They believe the valuation set-up is “very positive”
- Goldman Sachs upgrades Expedia from hold to buy
Five-star analyst RBC Capital has singled out Amazon and Expedia as being among the best stocks to buy before earnings. The firm’s Mark Mahaney is getting behind the old mantra “buy low, buy now” as he believes the tech stocks offer a good value.
Mahaney says the “valuation set-up is very positive” for these stocks at the moment, and with Amazon set to report earnings in late January or early February, it certainly looks like investors could take his words to heart.
According to Mahaney, Amazon is the internet stock that has the least risk into earnings. “65 Straight Quarters (except for 1 qtr) of 20%+ organic Rev. Growth, although Profitability has admittedly been…uneven. But now, it’s uneven up, thanks to the best revenue mix shift story in tech – i.e. AMZN’s fastest growing businesses (AWS and AMS) are high-margin,” he said.
Expedia is another stock that analysts are backing. “We continue to believe that EXPE upside remains through multiple expansion to its historical mean and through consistent EBITDA/EPS growth,” Mahaney told investors.
The stock has growth potential as the company’s $100B worth of bookings only makes up about 6% of the world travel market, which is estimated to be worth around $1.6T. This means that there is still plenty of room for expansion for Expedia.
Another big positive for investors is the fact that the company is rare among its internet-based peers as it pays dividends, currently standing at $0.32 quarterly on a 1.12% yield.
Mahaney is not the only voice praising the stock; Goldman Sachs’ Heath Terry is also a supporter. He has upgraded the stock from Hold to Buy and put a $140 price target on it. He wrote in a note to investors: “We believe the stock’s relatively low trading multiple means it is likely to outperform in a tougher market environment for growth stocks.”