The Priceline Group (BKNG -0.51%) has been a massive winner for long-term investors. Through its ownership of top travel brands such as Kayak.com, Booking.com, RentalCars.com, and more, Priceline Group has grown like a weed and provided its investors with a return of more than 2,000% over the last 10 years.
So which stocks do we think are capable of following in the Priceline Group's footsteps over the next 10 years? We asked that question of a team of investors, and they picked Five Below (FIVE -2.30%), TripAdvisor (TRIP -1.06%), and Abiomed (ABMD).
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Actually, it is all fun and games
Rich Duprey (Five Below): It may seem silly thinking a specialty retailer that cashes in on teen trends could replicate the success of Priceline Group, but the business model of Five Below is every bit as serious as naming your own price, the gimmick that got the reservation service flying in the first place.
Five Below typically looks for "trend right" products that it can sell in its $5-or-less price range, and once finding it, managing the trend from beginning to end is no simple task. Yet the specialty retailer has managed to do just that time and again, most recently with the fidget spinner that let it beat analyst expectations on the top and bottom line.
The $5-and-below price level has become the sweet spot for deep-discount retailers such as Dollar General (DG 0.21%), which has more than 80% of its SKUs at that price point, and Dollar Tree (DLTR -1.04%), where everything is priced at $1 in its namesake stores. The deep-discount chains have been among the most consistent performers when times are good or bad.
Wall Street expects Five Below to continue expanding its earnings 21% annually for the next five years, and it is in its growth phase now, with at least 100 new stores opening this year.
Fads like fidget spinners come and go, but there's always some new must-have sensation to follow right behind. Few stores have proved more adept at capitalizing on this repeatable business, and its stock should appreciate greatly as the next one-hit wonder takes tweens and teens to the next level.
An industry rival with a bright future
Demitri Kalogeropoulos (TripAdvisor): I think TripAdvisor's stock has a good shot at producing gains that could rival its much larger travel-booking peer. Sure, that bright potential has been clouded by stubbornly weak growth lately. After a brutal stretch of revenue declines following its switch to an instant booking sales model, TripAdvisor disappointed investors last quarter. Its core hotel business slipped back into negative territory even as investors were hoping to see a fifth consecutive showing of accelerating gains.
But Wall Street's lack of patience could spell opportunity for investors who believe management's claim that the new booking approach, by improving the shopping experience, will ultimately allow the company to grab a bigger piece of the $550 billion online travel spending market.
TripAdvisor needs to show progress toward that goal now that the instant booking model has been in place for over a year. That's why I'll be looking for the hotel business to return to consistent growth over the next few quarters. Meanwhile, its ancillary segments, attraction and restaurant bookings, could soon become large, profitable niches themselves. That this division amounted to just 9% of the business in 2014 but has spiked to over 20% today demonstrates that TripAdvisor has more than one path available toward winning market share over the next few years.
The return potential will get your blood flowing
Brian Feroldi (Abiomed): Heart disease has been the leading cause of death in the U.S. for decades, and heart attacks are a major reason why. Each year, more than 700,000 Americans suffer from a heart attack, and many don't survive.
Abiomed is on a mission to give heart attack victims a fighting chance. The company sells a line of minimally invasive pumps that are inserted into the heart following an attack. Once inserted, the pump helps to keep a patient's blood flowing, giving the damaged heart a chance to rest. As a result, the heart has a chance to repair itself, and the patient's odds of survival increase dramatically.
Abiomed's innovative solution has caught on with healthcare providers from across the country, and the company's financial statements have been flourishing for years. In turn, Abiomed's stock has treated investors to fantastic gains over the years that easily outpace the Priceline Group.
Looking ahead, Abiomed continues to look poised for prosperity. The company is still putting up great growth numbers in the U.S., and the international opportunity continues to look large. That's especially true now that the company has received reimbursement approval in Japan.
The only knock against investing in Abiomed right now is that its valuation is very high. Still, I think investors who take the long view can still win by buying a few shares today.
