Closing Trade ($AAPL, $AOL)

avatar By: IS
Date posted: 02.27.2015 (3:00 am) | Write a Comment
Today, I will be closing my first trade of the year where I went long Apple ($APPL) and shorted AOL inc ($AOL). That trade is now up over 47%, not too bad right? It has certainly helped the overall portfolio which is up 11.42% (see all trades here).
Why am I closing the trade? No it’s not because I don’t believe in Apple. In fact, it’s very likely that I will open a new position with Apple (and I do still own it as one of my 3 long term speculative picks). Rather, I’m closing it because the trade is up nearly 50% and I’d like to take the opportunity to revisit it and see if I can find a better trade going forward.
Here is the chart since opening the pick on Jan 5th.
AAPL Chart

AAPL data by YCharts

You can expect a new trade on Monday morning:)
Disclaimer: Long Apple ($AAPL)

New Trade: Long TripAdvisor ($TRIP) & Short Pandora ($P)

avatar By: IS
Date posted: 02.17.2015 (3:00 am) | Write a Comment

The last few days were not as great with Travelzoo (one of my short positions) rising a bit but the 6.27% return so far this year remains very solid. Today I’m opening a new trade between 2 stocks trading at comparable levels but that I have extremely different longer term views about.

As is always the case you can see my long & short trades (from 2015 but also past years) here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers for today’s trade, two high priced stocks:

Ticker
Name
Price
PE Ratio
PE Next Year
Return YTD
Sales Growth
Analyst rating
Book Value
Beta
Revenue/Share
Sales 5Y Avg Growth
EPS 5Y Avg Growth
Sales 5Y Avg Growth
EPS 5Y Avg Growth
PPandora Media Inc15.44N/A27.5-15.9344.3542.791.414.49N/AN/AN/AN/A
TRIPTripAdvisor Inc84.8152.8227.9310.3731.93.368.651.558.7129.4N/A31.39N/A

The chart that I always look at is below and this time, it “could” indicate that Pandora is a better buy given comparable forward valuations but the big difference is that I think Pandora’s margins will remain extremely low over time so it would need a much bigger lead in order to justify its current valuation.

TRIP Revenue (Quarterly YoY Growth) Chart

TRIP Revenue (Quarterly YoY Growth) data by YCharts

$TRIPLong TripAdvisor Inc. (TRIP)

No surprise that I’m buying TRIP again. I had closed an existing long position a week ago before the earnings and thus end up losing on a (very) big gain following the earnings release but overall, I think TRIP will continue to do extremely well and feel very comfortable holding it at these levels. I see very few if any threats to TripAdvisor. Its biggest online travel competitors are trying to expand but they’re not competing on TRIP’s “core offer” of online reviews & ratings. Priceline buying Kayak and Expedia buying Orbitz are good moves but pose no threat to TRIP in my opinion.

ycharts_chart

Next earnings release: May 6th 2015

$PShort Pandora Media Inc. (P)

Ah looking at the below chart is sad in a way. Why? I’ve been short Pandora over and over in the past few months but I still managed to miss out on much of Pandora’s decline, especially in the last month. I fear that I’m repeating myself but the bulk of my belief is that Pandora has a terrific service but is going against formidable competitors such as Spotify but also others like Apple, Google and Amazon that are willing to lose money over the long term in order to make their “ecosystems” more attractive. That is a big problem and as smart cars expand, it will become increasingly easy to access those competing services. I just don’t see how Pandora will be able to build a solid long term business and can’t possibly justify its current valuation.

ycharts_chart (1)

Next earnings release: April 24th 2015

Disclaimer: Long position on TripAdvisor (TRIP) and I will open this trade on today’s open

Adding A Stock To My Tech Stock Dashboard ($BOX)

avatar By: IS
Date posted: 02.12.2015 (5:10 am) | Write a Comment

$BOXToday, I’m adding the first of several stocks to the list of stocks that I follow; Box Inc. (BOX)

For those of you who are new to the blog, you might know that one of the main things I blog about are my long & short tech stocks. It’s not a big part of my investments but it’s a lot more active than the rest and has done extremely well in the past few years. Evey time that I look for a trade opportunity, I start by looking at the list of stocks that I follow. That list can be found here.

I also track news, earnings reports and more for all of these companies. I generally tend to stay away from trading recently turned public companies. It is partially because I want more historical data on those companies but also because they are so volatile in the first few months. Just look at the daily movements by BOX:

ycharts_chart

What is Box?

Box is an extremely interesting company to add. It is an online file sharing company that mainly focuses on a business offering. As companies quickly move their assets towards the “cloud”, Box is very well positioned as one of the leaders. Many companies have tried to do this themselves which often ends up with security issues as we saw with the now famous Sony hacking incident.

Growing Sector But…

Box’s main problem of course is that it competes with the likes of Microsoft, Google, Dropbox, Amazon and many others in a sector where margins are quickly decreasing. Many of these companies are looking at selling this service as a way to establish a relationship with these businesses rather than trying to make money off of it which makes it extremely difficult for BOX to extract good margins and for that reason, I’d be very hesitant to pay a high valuation for a stock like that.

Beware The Company’s Financials

Like other stocks such as ZenDesk (ZEN) and Salesforce (CRM), Box should be seen as a SAAS (software as a service) company and valued based off of that. Here is a great article that explains the differences involved:

-Understanding SAAS: Why the pundits have it wrong

Do any of you have a position or opinion on BOX?

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New Trade: Long Google ($GOOG) & Short eBay ($EBAY)

avatar By: IS
Date posted: 02.11.2015 (3:30 am) | Write a Comment

Yesterday was a very good day (I’m closing my first trade) and the average trade return so far this year as shot up north of 7%. Of course, it’s still very early and things could (and will) change significantly but it’s obviously better to have a good start than a bad one (duh!).

As is always the case you can see my long & short trades (from 2015 but also past years) here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers for today’s trade, two high priced stocks:

Ticker
Name
Price
PE Ratio
PE Next Year
Return YTD
Sales Growth
Analyst rating
Book Value
Beta
Revenue/Share
Sales 5Y Avg Growth
EPS 5Y Avg Growth
GOOGGoogle Inc536.94N/A15.910.2718.884.44N/AN/AN/A22.4634.7
EBAYeBay Inc55.2734.6215.96-3.1911.563.7916.260.9114.3116.1833.14

The chart that I always tend to look at is once again to be used today and I do expect the clear trend here to continue with eBay’s revenues and earnings growth slowly moving down. Google is trickier to predict but I feel confident that it will be superior to EBAY’s.

GOOG Revenue (Quarterly YoY Growth) Chart

GOOG Revenue (Quarterly YoY Growth) data by YCharts

$googLong Google Inc. (GOOG)

To say that I have blind confidence in Google would be a lie. Even after all these years, I do still struggle to get a clear picture of Google and what it is actually trying to do. In one way, Google is a simple company that generates advertising revenues from its search engine dominant position. But then you have all of these other products, the incredible Android position, Google X, etc. I do still think though that in the end, Google is able to generate significantly higher long term growth than a company like eBay which is priced at an identical forward P/E ratio.

ycharts_chart

Next earnings release: April 16th 2015

Short eBay Inc (EBAY)

eBay has been a fairly easy company to track in the past few years which I’ve been treating mostly as an online bank because that is where most of the growth & value is.  The fact that eBay has finally confirmed it would be spinning out Paypal in a few months is a positive but as I’ve mentioned in the past I think in a way it’s a little too late for Paypal to become what it once had an opportunity to become (the default “electronic” payment system).

ycharts_chart (1)

$ebay

Next earnings release: April 22nd 2015

Disclaimer: No positions on eBay (EBAY) or Google (GOOG) but I will open this trade on the open

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Closing 1 Trade ($TRIP, $NILE)

avatar By: IS
Date posted: 02.11.2015 (3:00 am) | Write a Comment

Great news today as I’m closing my first long & short trade of the year. Two trades are currently over the +20% ratio but for now I will keep the long Apple (AAPL) & short AOL Inc. (AOL) trade live for now. This morning however I’ll be closing the trade that I did on January 9th where I went long TripAdvisor (TRIP) and short Blue Nile (NILE). Yesterday, NILE announced very disappointing results helping me in a big way. As much as I believe in the long term future of TripAdvisor, I was not terribly impressed with the last quarter earnings call and am a bit nervous about this week’s earnings so I prefer taking the gains here:)

TRIP Chart

TRIP data by YCharts

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New Trade: Long Twitter (TWTR) and short Rackspace ($RAX)

avatar By: IS
Date posted: 02.09.2015 (3:00 am) | Write a Comment

Today I’m opening a 6th trade, finally getting close to being fully invested:) There wasn’t much change last week and with the earnings season coming to an end, volatility will likely decrease significantly which is more than welcome.

As is always the case you can see my long & short trades (from 2015 but also past years) here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers for today’s trade, two high priced stocks:

Ticker
Price
PE Ratio
PE Next Year
Sales Growth
Analyst rating
Book Value
Beta
Revenue/Share
Sales 5Y Avg Growth
EPS 5Y Avg Growth
Sales 5Y Avg Growth
EPS 5Y Avg Growth
RAX47.4971.645117.233.78.530.9611.0823.2832N/AN/A
TWTR48.01N/A53.03111.013.665.72N/A2.32N/AN/AN/AN/A

With Rackspace being in such a high growth sector, you’d think that growth would be much higher but the below chart surprised me. Twitter has not been public very long so it’s still early to say how the company will be able to keep impressing investors:

TWTR Revenue (Quarterly YoY Growth) Chart

TWTR Revenue (Quarterly YoY Growth) data by YCharts

$TWTRLong Twitter (TWTR)

Ah Twitter has been absolutely fascinating to cover in the past couple of years. I’m a very active user (mostly as a reader) and it’s perhaps the app that I use the most on my phone. I think that in many ways, the company has been under-estimated from the very start. I’m not part of those that had doubts about Twitter’s ability to generate income but it’s still very nice to see that growth finally come in to play. It still boggles my mind though to understand why Twitter has struggled so much to grow its user base. It’s a complex product to use in some ways and is certainly a challenge to start off with compared to others like Facebook (FB) but you’d still think that after all these years, Twitter would have figured out ways to get more mainstream use. Hopefully that happens in the near future. It’s a very big problem but I still feel like it’s the only thing pulling back Twitter and have faith that they will figure it out. Can Twitter become an “ecosystem”? I have strong doubts but I also think the product is unique enough to remain relevant on all ecosystems. In the end, I’m not clear that this is a great buying point for Twitter bur if TWTR and RAX are both trading at almost identical forward P/E’s, it feels like a no brainer to me.

ycharts_chart

Next earnings release: April 29th 2015

$RAXShort Rackspace Inc. (RAX)

Rackspace is a very interesting company and while over the years I have become more positive about it, I remain very sceptical of a company that will have trouble distinguishing itself in a world with extreme competition. Yes, the cloud hosting/computing area is an extremely fast growing one but it’s also one where Rackspace is competing with the likes of Amazon, Microsoft, Box, etc. RAX has been up and down and my primary fear of course are the on and off rumours that RAX could end up selling itself.

ycharts_chart (1)

Next earnings release: February 17th 2015

Disclaimer: No positions on Twitter (TWTR) or Rackspace (RAX) but I will open this trade on the open