Sabre Group (TSG)

TSG announced after the close an improved outlook for 2006. Return on capital should exceed 18% this year and has steadily improved from levels post 9/11 that were only 1-2%.

The company is projected FCF of $300 million for 2006. Compare that to a current enterprise value of $2.6 billion The business could trading at a 11.5% FCF yield given these projections and Travelocity growth and margin improvement should exceed that of its peers. Witness Cendant's "challenges" at Travel Distribution.

Travelocity revenue is expected to grow by 40% YOY according to management's projections.

The stock looks quite cheap to me.