Archive for March, 2016

New Trade: Long Alphabet ($GOOG) & Short Blue Nile ($NILE)

By: ispeculatornew | Date posted: 03.24.2016 (3:00 am)

Today I am opening my 10th trade of the year between 2 stocks that trade at similar P/E ratios. This week was actually a bit more of a challenge. I have 5 open trades, a number of stocks that I am not willing to trade for a variety of reasons (China stocks, stocks that are too difficult to borrow, stocks that have potential takeover activity, etc) but I ended up being very happy with what I found. As is always the case you can see the existing live trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
GOOGAlphabet Inc738.06N/A18.46-2.3913.624.641.19N/A20.7313.25
NILEBlue Nile Inc24.5427.4722.07-31.641.3830.9941.145.882.11

And the growth story is not even close…

NILE_GOOG_chart

Long Alphabet (GOOG)

Given all of my trading over the years and my focus on internet stocks, you’d probably expect me to be very active on Alphabet/Google but that has not been the case. Why? A combination of factors but as much as I admire what Google has built and its incredibly ambitious goals but I had little confidence in how much important delivering returns to its shareholders had for its management. But when Google went out to hire Ruth Porat as its new CFO, it gave me hope that things might change. When Google ended up splitting its business to give more transparency (creating Alphabet), that was a great sign. Then, news came out that Google was going to try to sell its robotics division Boston Dynamics partially because it saw no clear path to profitability. It seems clear that Google’s finances are being transformed and while I certainly hope to see Alphabet continue to focus on moonshot projects, the financial aspect should still remain an important part of the discussion. For that reason, buying GOOG at this valuation, especially compared to slower growing NILE makes a lot of sense. Thanks to its dominant position in AI, Google will at least have a shot at becoming an important player in areas such as driverless cars, cloud services, etc.

GOOG_chart

Next earnings: April 21st 2016

Short Blue Nile (NILE)

It feels like I’m always shorting Blue Nile (NILE) doesn’t it? But a (fairly) high P/E that has been unable to display much in terms of growth and that has been the case for years now. It’s difficult for me to understand why NILE continues to command such a high premium but I’m not complaining in the meantime.

Just look at the chart of traffic from Google trends:
NILE
NILE_chart (1)

Next earnings: May 6th 2016

Disclaimer: This trade on GOOG-NILE will be done on today’s opening,

New Trade: Long Expedia ($EXPE) & Short Microsoft ($MSFT)

By: ispeculatornew | Date posted: 03.17.2016 (4:16 am)

Today I am opening my 9th trade of the year between 2 stocks that trade at similar P/E ratios. As is always the case you can see the existing live trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
MSFTMicrosoft Corp54.3522.6617.78-1.357.7749.691.2211.443.91-3.99
EXPEExpedia Inc114.352.6317.1-7.8315.774.1432.371.1651.2618.34N/A

Microsoft has a good story going on (more on that later) but the clear winner in terms of growth is Expedia.

EXPE_MSFT_chart

Long Expedia (EXPE)

Over the past year or so, I’ve been more impressed with its execution and I am starting to believe that Priceline (PCLN), Tripadvisor (TRIP) and Expedia (EXPE) are the 3 giants that will continue to do well over the next few years. Expedia has been able to secure key partnerships and focus on the customer experience. I do think EXPE will be able to keep up the strong growth that it has seen in recent years.

EXPE_chart

Next earnings: April 28th 2016

Short Microsoft (MSFT)
It does feel strange for me to short Microsoft here. I do usually short names that I no longer think are overvalued in the short term but also over the long term. I am a strong believer in most of the actions by Microsoft in recent months and certainly think it has given itself a shot to thrive in this new cloud/mobile world.

Cloud space: Apart from Amazon’s AWS, you could argue that Microsoft and Google are the only 2 significant players. Thanks to its already strong enterprise presence, I’d tend to believe that MSFT will continue to do extremely well here
Mobile: Windows Phones are not a clear success it’s safe to say but Windows is working on other ways to profit from this new mobile environment. It has built a solid suite of prodcutivty apps (Outlook, Wunderlist, Skype, office, etc)

That being said, there are still significant challenges especially when you consider the source of much of Microsoft’s revenue; Windows and office.

With PC sales declining and Windows market share on mobile being so small, this new world brings major challenges to Microsoft from a growth perspective. I do think that the company will be able to thrive but I’m not sure it makes sense for MSFT to be trading at the same P/E as EXPE.

MSFT_chart

Next earnings: April 21st

Disclaimer: This trade on EXPE-MAST will be done on today’s opening,

New Trade: Long Tripadvisor ($TRIP) & Short Yelp ($YELP)

By: ispeculatornew | Date posted: 03.07.2016 (3:00 am)

Today I am opening my 8th trade of the year between 2 stocks that trade at similar P/E ratios and have a “somewhat” similar business model. As is always the case you can see the existing live trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
TRIPTripAdvisor Inc65.5751.0626.53-23.3819.743.089.721.5110.3624.16N/A
YELPYelp Inc21.75N/A26.7-26.3945.63.549.191.267.3659.08N/A

I usually go for the stock that seems to be underpriced relative to its revenue growth but today I’m actually going for TRIP. I don’t believe the revenue comes close to explaining the story going on between the 2. The following Google Trends chart does give a bit more.

YELP_TRIP_chart

YELP_TRIP

 

Long Tripadvisor (TRIP)

I continue to be a long term believer in TRIP even though the stock has declined quite a bit since my long term speculative pick. Part of it of course is the overall tech sector decline in recent months but there has also been a clear cut between the “sure bets” that have been able to display top and bottom line growth and those that have not been able to tell such a story. TRIP has been a bit slow which I would argue is to be expected given its model. I do like the Instant Booking direction and the fact that several of the most important players (Priceline, Marriott, etc) have now signed up certainly speaks to its long term future. I think that will eventually mean significantly increased revenues per visitor but until that shift happens, TRIP will have trouble outpacing the market.

TRIP_chart

Next earnings: May 4th 2016

Short Yelp (YELP)

You might have believed that I not that optimistic about TRIP but I’d say that YELP is in similar but worse position. It faces much stronger competition (from the likes of Google, Tripadvisor, Priceline, etc) and I am very skeptical about YELP’s ability to keep up the growth in the next 1-2 years. I’m also less afraid of YELP being acquired than I’ve been in recent years making the risk vs. reward of shorting it better.

YELP_chart

 

Next earnings: April 27th

Disclaimer: This trade on TRIP-YELP will be done on today’s opening, I do have an existing long term speculative position on Tripadvisor (TRIP)

New Trade: Long Facebook ($FB) & Short Travelzoo ($TZOO)

By: ispeculatornew | Date posted: 03.02.2016 (3:00 am)

Today I am opening my 7th trade of the year as I will be trading two stocks trading at similar forward P/E ratios. As is always the case you can see the existing live trades here:

http://www.intelligentspeculator.net/livetrades

 

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
FBFacebook Inc109.8283.5325.982.1643.824.7415.540.996.451.72N/A
TZOOTravelzoo Inc7.959.2431.78-6.21-0.2531.451.059.633.17-20.04

Travelzoo did have a one off strong growth # in its latest # but even that pales compares to what Facebook has been able to achieve:

FB_TZOO_chart

Long Facebook (FB)

Facebook is my biggest single stock position and I continue to be a big believer in the stock for many different reasons. It has been managed extremely well wih a long term focus that put its focus on users and products. That has resulted in building an empire that is quickly taking a significant share of online ad budgets as it continues to build its platform. I do expect growth to remain fairly staeady (a bit downward given its size) over the next few years as it starts putting more efforts into monetizing its messenging properties.

FB_chart

 

Next earnings: April 20th 2016

Short Travelzoo (TZOO)

In many ways, Travelzoo looks like it has failed to adapt to the new internet. It has not built on top of a community or even a very strong brand. Rather, it relies on a very big database (mailing list) of users to which it sends out daily/weekly deals. The problem of course is that it makes growth very challenging and the company faces competition from the likes of Groupon but also smaller specialized sites that squeeze margins. For that reason, you will not be surprised to hear that the growth has been unimpressive in recent times:

TZOO_chart

Next earnings: April 14th

Disclaimer: This trade on AAPL-EBAY will be done on today’s opening, I do have an existing Apple position 

Closing 2 Trades

By: ispeculatornew | Date posted: 03.01.2016 (5:15 am)

You’d think I’d be able to slowly get all of my trades into play but I seem to be closing off as many trades as I’m able to open these days.  This morning I’ll be closing 2 of the existing trades although one of them is a losing trade this time around. That being said, the portfolio is still over +10% so far this year and hopefully will keep up.  As is always the case, here is the link to see my 2016 (and past years) trades:

http://www.intelligentspeculator.net/livetrades

Long Facebook (FB) & Short Yelp (YELP) -41%

FB_YELP_chart

Long Priceline (PCLN) & Short Expedia (EXPE) +20,89%

PCLN_EXPE_chart