Top tech analyst Mahaney likes this cheap travel stock into 2024

Published Fri, Dec 29 20236:53 AM EST

Evercore ISI's Mark Mahaney swapped in Expedia as a top pick, citing a valuation-based opportunity. The senior managing director replaced rideshare stock Uber with the online travel platform among his top picks. He said Expedia will have a similar growth rate to competitors Booking and Airbnb , while trading at a much cheaper valuation — at least for now. "If the growth rates converge, the multiple's probably going to converge too," he said on CNBC's "Money Movers" on Thursday. "You want to play the multiple gap." Mahaney also pointed to the company's self-help initiatives such as a new consumer loyalty program and a technological integration. As a sector, he said online travel was great given the companies' strong cash flows and willingness to buy back shares. There hasn't been a softness yet in travel, he added. EXPE YTD mountain Expedia shares this year His bullish call comes on the tail-end of a banner year for the stock, with shares up nearly 75%. That's helped the stock recover some losses from 2022's drop of more than 50%. With 2023's gains, the stock is on pace to notch its best year since 2012, when shares surged more than 110%. But the majority of Wall Street sees a pullback ahead. While the average analyst surveyed by LSEG has a buy rating, the price target implies shares can slip more than 9% over the next year. Gains will be harder to come by in 2024 More broadly, Mahaney said investors need to be smart and a little pickier when investing in technology stocks after the big gains in the sector this year. The Nasdaq Composite has outperformed, gaining more than 44%. The tech-heavy index is on track to see its best year since 2003 as the artificial intelligence craze and a rebound in mega-cap technology stocks — including a group called the "Magnificent 7" — energized investors. "I don't think the returns can be as great as what you had in '23," Mahaney said. Given that, he pointed to Amazon as his top pick. Mahaney called the stock's performance in recent years unimpressive compared with the broader group. But he said there's room for upside if the e-commerce giant's cloud business can "truly accelerate." To be sure, Amazon shares have surged more than 80% in 2023 after losing almost 50% the year prior. The average analyst is bullish on future performance, with a buy rating and price target suggesting shares can climb more than 15%.