Monday, February 14, 2011

Orbitz Worldwide, Inc. (NYSE:OWW) Q1 2011 Analysis

Recent price: 4.26$
P/E Ratio: -
3 month Target Price: 6.00$

Company Description
Orbitz Worldwide, Inc. is a global online travel company that uses technology to enable leisure and business travelers to search for and book a range of travel products and services. Its brand portfolio includes Orbitz, CheapTickets, The Away Network, and Orbitz for Business in the Americas; ebookers in Europe; and HotelClub and RatesToGo based in Sydney, Australia. 

The Company provides customers with the ability to book a set of travel products and services from suppliers worldwide, including air travel, hotels, vacation packages, car rentals, cruises, travel insurance and destination services, such as ground transportation, event tickets and tours.

Confidence Margins
Strong resistance $7.01 (+65%)
Light resistance $6.50 (+53%)
Light support $4.22 (-1%)
Strong support $3.56 (-16%)

This traveling company that has been unfairly punished by its investors because a similar company in the industry, Expedia Inc. reported a poor fourth quarter 2010 results. Even if they are similar, it there seems to be reasons to think that the company did not fare as bad as it's counterpart. This will prove to be a very profitable trade because it has already seen much of the downside.

Entry strategy
For the cautious investor:
Buy the stock for 4.50$ or less.

For the risk-taking trader:
Buy the 5.00$ May 2011 out of the money call options for about 40$ a contract.
This position will require the investor to keep an eye on his portfolio to make sure he doesn’t endure any unplanned losses. The support levels imply a mild possibility for the stock to reach them. One might consider selling if the stock gets close to it's light resistance by the time they issue their quarterly statement.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 6.00$, or keep it until about 6.50$ if you are very bullish.

For the risk-taking trader:
These options are currently undervalued because investors assume that there should not be much movement upwards for this stock. Sell them if the stock reaches the same levels as in the case of the cautious investor.

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