Ctrip Stock to Ride High on Bullish Trends
Today’s stock is a great play on China’s rising middle class, which is spending money to buy the good things in life and is eager to travel all around the world. This increase in aspirations and the rise in wealth produces a bullish outlook for the few companies that have strengthened their business over the years and now stand to gain tremendously amid the strong tailwinds.
Ctrip.Com International Ltd (ADR) (NASDAQ:CTRP) is one such stock that stands to reap handsome rewards in the coming years. The company is a leading travel service provider of accommodation services, transportation ticketing, packaged tours, and corporate travel management in China. Travelers can choose from a number of options from the comprehensive product offerings of the tourism giant.
The online travel agent stands to gain from the favorable trends in the local tourism market as well as the planned expansion in the international market, which is expected to have a positive impact on CTRP stock. The company dominates in China, which is the world’s leading outbound market.
According to the latest data from the World Tourism Organization (UNWTO), 2016 was another strong year for outbound tourism from China. The number of outbound travelers rose six percent to 135 million in 2016, and they spent around $261.0 billion, an increase of 12%. The number is expected to continue going up in the future. (Source: “Chinese tourists spent 12% more in travelling abroad in 2016,” World Tourism Organization (UNWTO), April 12, 2017.)
CTRP stock is the best way to play the boom in China’s travel industry. Ctrip is China’s biggest online travel site, and with the domestic tourism industry posting strong growth, the future looks bright for Ctrip stock. Ctrip’s outbound travel business is enjoying a strong growth momentum and the company’s focus on gaining more market share means more gains for CTRP stock. The company is aggressively pursuing its goal of strengthening its position in lower-tier cities in the country, which will improve its share further.
Ctrip is not only focused on further penetrating the local market, but is also investing to become a global player. The company acquired a leading global travel search site, Skyscanner Ltd, last year in order to enhance its international presence.
Skyscanner enables users to compare prices from hundreds of travel sites when they are searching for flights, hotels, and rental cars. The investment in Skyscanner will enable Ctrip to provide a seamless booking experience for its users. The company shall leverage its platform to better serve travelers around the world. The company’s focus on going global means further gains for CTRP stock.
The travel management company beat analyst expectations when it reported its first-quarter results last month and posted strong growth in its net revenues as well as gross margins. The accommodation business saw healthy growth and the transportation ticketing business continues its strong growth on the back of its air ticketing business, fast-growing new business units, and the addition of Skyscanner.
CTRP stock is up 37% in the year to date as compared to the nine-percent gain posted by the S&P 500 index in the same time period. The following Ctrip stock chart shows its phenomenal journey over the past five years, where it has posted returns of more than 1190%.
Chart courtesy of StockCharts.com
Although last year was not that great for the stock, things are likely to turn around from now on. Travel demand is expected to remain strong and the company’s efforts to grow internationally should bear fruit.
The Bottom Line on CTRP Stock
The company started the year on a strong note by posting impressive results. The healthy revenue growth and expanding margins bode well for Ctrip stock going forward. Further expansion into the Chinese market, along with growth in the international markets, will power CTRP stock further up.
The company acquired Skyscanner last year, and by leveraging its overseas investments, Ctrip shall expand its international product offerings and improve user experiences for Chinese as well as international travelers.
The company is China’s biggest online travel site but still has lots of room to grow. CTRP stock is a great play on the rise in wealth among the Chinese middle class, and investors might consider adding it to their growth picks.