Editor’s Note: Over Thanksgiving weekend, my wife and I visited our former next-door neighbors while we were back in the DC area. We raised our kids together and have remained good friends ever since.

That’s why we spent most of that evening planning a trip to Italy with them next year. I’ve never been there before, so I will defer to my neighbors as to how best to plan our adventure.

There is no shortage of websites to help them do that. These days, you can obtain airfare, hotels, and car rentals in just a few minutes. We told them to make all the plans and just let us know how much it cost. That’s my idea of a travel service!

More Travelers Than Ever

With the pandemic no longer a limiting factor, people are traveling like never before. During the first eight days of this month, The Transportation Safety Administration (TSA) reported a daily average of 2.49 billion airport travelers.

That is nearly 14 percent higher than last years’ figure of 2.18 million, and more than 6 percent greater than the 2.34 million air travelers recorded in December 2019, shortly before the pandemic started shutting down air travel.

We also have more money to spend on travel. Over the past five years, average hourly earnings in the United States have increased by 25 percent. Even though food and housing prices have gone up even faster, consumers are prioritizing vacation spending over most other non-essential items.

Twice the Price

The unexpected strength of the travel market has been a boon to online travel sites. Since bottoming out below $93 in October 2023, Expedia Group (NSDQ: EXPE) has almost doubled in share price.

That development has been especially good news for my PF Pro subscribers. Fourteen months ago, I recommended they buy shares of EXPE. I opined then, “If Wall Street has a problem with Expedia, it isn’t due to the company’s recent performance.”

A few weeks later, Expedia released its fiscal 2023 Q3 results, which were outstanding. Those numbers included a 117% increase in gross bookings and a 97% rise in total revenue.

That’s the kind of performance that Wall Street likes to see. That day, EXPE shot up nearly 20 percent.

It kept going up until hitting $150 early this year, at which time it reversed direction for a few months. But it has been on a tear since releasing its fiscal 2024 Q2 numbers four months ago.

Lucky Sevens

There’s something about the Expedia trade described above that I did not mention. I also included a suggestion for a LEAP, or long-term call option (a call option increases in value when the price of the underlying security goes up).

That option expires next month at the $90 strike price. At the start of this week, that option could be sold for $102. That is 750 percent higher than the $12 limit price we paid for it fourteen months ago.

Think about that for a moment. Expedia is not a tech company, nor does it sell high margin products. It sells information for a small fee to price conscious consumers. Yet, we have made more than seven times our money in the name in a little over a year.

Expedia also has a lot of competition, including Google Travel by tech heavyweight Alphabet (NSDQ: GOOG). Despite those headwinds, EXPE has doubled the performance of the SPDR S&P 500 ETF Trust (NYSE: SPY) over the past two years.

Uber Deal

The hot travel market has spurred M&A (merger and acquisition) interest in the space on Wall Street. Two months ago, a rumor surfaced that Uber (NYSE: UBER) was considering buying Expedia.

Neither company would confirm or deny the rumor, with insiders describing the dialogue as exploratory. But if Uber wants to gain control over Expedia’s enormous customer base, business permits, and intellectual property, acquiring the company would be the best way to do that.

Despite Expedia’s strong performance recently, it is valued at only13 times forward earnings compared to a multiple of 22 for the S&P 500 Index. Also, its PEG (price/earnings-to-growth) ratio of 0.5 is only half the 1.0 limit that legendary mutual fund manager Peter Lynch felt was a fair price to pay for a growth stock.

That’s why I think Expedia may end up getting acquired by Uber (or someone else) in 2025. People are on the move, and so are the dealmakers on Wall Street.

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