Expedia reported second-quarter earnings in July that beat analysts' expectations and caused the stock to skyrocket. However, CNBC's Jim Cramer explained that the outlook hasn't always been so rosy for the digital travel company, which deals with everything from hotels to cruises to rental cars.
Last August, the company lost CEO Dara Khosrowshahi to Uber in the midst of an intense hurricane season that impacted the entire travel industry.
Then, in October, in its first quarterly report without Khosrowshahi as CEO, Expedia reported a 22 percent increase in selling and marketing expenses that outpaced its 15 percent revenue growth, which was stunted due to increased competition from Priceline, the largest player in the industry.
"Wall Street sometimes gets overzealous in punishing growth companies for necessary spending. But that's not a good look when you're also reporting revenue shortfalls," Cramer said.
In February, the company also missed top- and bottom-line estimates, causing the stock to stumble. The stock hit a 52-week low that month as investors balked about how much Expedia was spending on growth.
"Basically, the bears figured that the business was slowing dramatically, but rather than trying to cut costs and trim the fat, Expedia had decided to double down on its troubled businesses," the "Mad Money" host said.
But this year's results have shown that Expedia is making a comeback. In April, the company announced a 15-million-share buyback program, or about 11 percent of the total share count.
For the most recent quarter, the company posted revenue in line with analysts' expectations and earnings per share that were 49 cents higher than forecast.
Expedia's gross bookings, a key metric for travel logistics companies, increased 13 percent year over year. Management also slightly raised their earnings forecast.
"All of that spending Expedia's been doing to bolster its business? You better believe it's working," Cramer said.
The stock is currently trading at 21 times next year's earnings estimates, which Cramer believes is cheap considering Expedia's 16 percent long-term growth rate.
Shares of Expedia closed up almost one percent on Monday, settling at $133 a share.
"The bottom line? The recent rally in Expedia is an object lesson…in why you shouldn't panic when you're dealing with a high quality stock in a growth industry," Cramer said. "I think it's got much more upside here, as Expedia's inexpensive and the stock's still more than $20 bucks off of its all-time highs."
"I'd be a buyer right here, and then I'd buy some more if the darn thing would ever come down," he concluded.