Google (GOOG 0.57%) and priceline.com (PCLN +0.25%) were racing to $1,000, but in the end there could only be one winner.
Priceline became the first of the two dot-com darlings to trade above $1,000 yesterday. The "name your own price" portal traded briefly in the four digits yesterday afternoon. It didn't stick at the end of the day, but it's still a milestone that didn't seem likely a decade ago when Priceline's shares were trading so low that it had to declare a 1-for-6 reverse split to avoid being a penny stock.
I've been watching this race for months. I had singled out Priceline as one of four stocks that could get to $1,000 before Google back in February. That was a pretty big gamble at the time. Google was busting through $800 at the time, and Priceline was trading well below $700.
It's hard to bet against Priceline. Online travel stocks have been a gamble for investors, but Priceline has proven to be a consistent winner. It's been blowing through Wall Street's quarterly profit targets for years, and that's something that Google can't say after having come up short in two quarters over the past year.
Priceline is also the one growing its earnings faster. Back out the impact of Google's Motorola acquisition last year, and Priceline would also be the faster grower on the top line as well.
This doesn't mean that Google isn't worthy of joining Priceline at $1,000. That should happen soon. Both stocks at $1,000 would be trading at roughly 20 times next year's projected earnings. Technically it would be Priceline with a forward earnings multiple of 20.3 and Google at 19.5, but it all rounds out to 20 given where the pros are parked these days.
The growth is there at both companies to justify the market premiums. Analysts see revenue and earnings growing at 17% clips next year. Priceline's growth is pegged by Wall Street to climb 23% on the bottom line and 22% on the top line.
Priceline's headier growth justifies it beating Big G to $1,000, but we also can't ignore that Google's moats when it comes to search, video, and mobile operating systems are substantial. Priceline is at a bigger risk of being disrupted by an upstart.
For now, both companies are doing fine. Priceline simply hit that big fat milestone first, but the race continues.
