As at time of writing, Webjet Limited [ASX:WEB] took a steep plunge today after six months of impressive growth.
Things get interesting when comparing its performance in the one-month versus six-month range.
As seen below, Webjet has been strong over the last six months hitting a high of $17.93 on 29 August.
Here is Webjet’s share price over the six-month range:
Strong growth is there, especially after the announcement of a 50% increase in revenue last month.
Now look at Webjet over the past month:
It’s a completely different story.
A downward trend followed by an (as of yet) unexplained sell off.
Perhaps this is a case of profit-taking.
Sometimes, after a long run of strong results, an otherwise healthy stock takes a plunge as investors cash in.
As the saying goes, ‘buy low, sell high’.
Should you buy or sell Webjet?
Research by the major insight groups like Thomson Reuters and Morningstar have mixed views.
But the major insight groups have a nasty habit of getting things wrong.
Which is where Money Morning steps in…
What you really need to look at is what barriers to growth Webjet might face in the near to mid future.
For instance, web traffic competition.
Webjet ranks 294th in Australia.
Meanwhile kayak.com.au is slowly catching up with Webjet with a significant rise up the traffic rankings in the last three months.
And expedia.com.au is actually ranked higher than Webjet at 281st.
Both of these websites are overseas competitors owned by massive US-based companies.
So on one hand, Webjet has a strong brand and increasing revenue.
On the other hand, they face greater competition from companies with big money.
Going forward the wise investor should be mindful of competition — not just big headline revenue increases.
For Money Morning
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