Why the Dow Rallied and the Priceline Group Inc. Climbed Today

Barnes & Noble Inc., as well as Home Depot, Inc. each end in positive territory as the bulls come out to play Tuesday

May 27, 2014 at 6:36PM
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As we get back to work after the long Memorial Day weekend, the stock market got back to work as well, ending higher across the board as April durable goods orders came in higher than expected. That means manufacturers see enough strength in the economy to invest in new factory equipment. It's always nice to see the titans of industry put their money where their mouth is, and the Dow Jones Industrial Average (DJINDICES:^DJI) agreed, as the blue chip index rose 69 points, or 0.4%, to end at 16,675.

Home Depot (NYSE:HD) enjoyed an above average day on Wall Street Tuesday, tacking on 0.6% after the S&P/Case-Shiller home price index rose modestly in March. The Case-Shiller index, a widely used metric that factors in home prices in 20 different major U.S. markets, rose 1.2% from the month before, representing a 12.4% year-over-year increase. While home prices rose at the lowest annual rate since last July, real estate is still on solid ground, and Home Depot shareholders are thanking their lucky stars for that. Despite tapering growth in housing prices, Motley Fool colleague Bob Ciura thinks Home Depot's stock is still a steal, especially considering the luscious 2.4% annual dividend it offers investors.

Pricelinevacation Slider

Source: Priceline.com

Meanwhile, The Priceline Group (NASDAQ:PCLN) soared 5.2% Tuesday, as a "risk-on" attitude benefited the momentum stock. Priceline, as a volatile growth stock, is highly sensitive to the fluctuations of the larger market, but the company has backed up its popularity with investors with the gobs of cash it brings in. Few $66 billion companies have grown sales by between 20% and 40% a year since 2009, but Priceline has managed to do just that. Such incredible success unfortunately brings enhanced scrutiny, and has even caught the attention of France's Economy Minister Arnaud Montebourg, who has summoned Booking.com (a Priceline subsidiary) officials to appear before France's commercial court to answer for allegedly illegal contracts with hoteliers.

Finally, shares of beleaguered bookseller Barnes & Noble, (NYSE:BKS) surged 9.3% today as investors jubilantly celebrated the stock's recent mention in Barron's. The Barron's featured article claimed that Barnes & Noble was unjustly loathed by Wall Street, as competition from Amazon.com and Apple in the e-book market threatened to do the company in. Far from being the antiquated brick-and-mortar literary retailer on the verge of bankruptcy, Barnes & Noble still has a thriving presence on college campuses, and boasts more than 660 bookstores nationwide, with a presence in all 50 states. While Barron's might be correct to consider Barnes & Noble a value stock -- the publication thinks the stock could more than double with a special dividend, share buyback, or piecemeal sale of its parts -- the business itself just doesn't have the long-term competitive advantages necessary to make it a screaming buy.

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John Divine owns shares of Apple. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends Amazon.com, Apple, Home Depot, and Priceline Group and owns shares of Amazon.com, Apple, Barnes & Noble, and Priceline Group. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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