Archive for March, 2017

Adding 2 New Stocks To Stocks I Follow (SNAP, SHOP)

By: ispeculatornew | Date posted: 03.17.2017 (3:00 am)
Today I’m happy to confirm that I’m adding 2 new stocks to the list of stocks that I follow:
Snapchat Inc (SNAP)
Shopify (SHOP)
Shopify (SHOP) is a Canadian based company that has a platform making it very easy for merchants to start selling their stuff online. That means making it easier for merchants to build a website, list their items, process orders, etc. There is of course a lot of competition in the sector but it’s fair to say that SHOP has emerged as a market leader and given the fact that my web company does have items to sell (not on this blog though), I did end up going through their website quite a bit as well as look for competitors. I then spent a bit more time looking at its financials and while I doubt I’ll be trading the company anytime soon, I will start following it, listening earnings calls (or reading transcripts), etc. So you should expect some commentary in the coming months.
Snapchat (SNAP) is a fascinating company. If you exclude Uber and Airbnb, it is the one company I was most looking forward to turning public. There has been an incredible amount of buzz about Snapchat and I’ve personally read at least 15-20 good pieces about Snapchat. As is the case for other IPO’s, I don’t expect to trade the stock anytime soon but I am excited to get going. With LNKD’s purchase by MSFT about to close, we’ll be down to Facebook (FB) and Twitter (TWTR) in terms of listed social media stocks. I know that SNAP considers itself a camera company 🙂 Here are my main takeaways so far:
-SNAP’s user engagement is very impressive I’m much more interested (at this point) about that evolution than in revenues or profits
-SNAP’s user growth is a major source of concern. There is no way that SNAP can livve up to its valuation if Instagram truly stopped or slowed down significantly enough SNAP’s user growth.
-Evan Spiegel, SNAP’s foudner and CEO does so far look very impressive in terms of product ideas and execution. Given SNAP’s listed shares are non-voting, this is a similar case to Facebook’s where SNAP’s future to a large extent depends on Spiegel’s performance. Tough to ask him to be the next Mark Zuckerberg but this will be interesting to follow
Overall, I personally would and will stay on the sidelines for now. I’d be very afraid to be both long and short at these levels until I see a few more earnings/numbers come out.
I’d love to hear your thoughts if any on Snapchat though. Are any of you long? 

New Trade: Long Priceline (PCLN) & Short Travelzoo (TZOO)

By: ispeculatornew | Date posted: 03.16.2017 (3:00 am)

Today I am opening my 10th trade of the year in what has so far been a good year. As is always the case, you can see past 2016 (and previous years) 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
PCLNPriceline Group Inc/The1767.9828.2420.4520.6616.474.62200.221.23217.0719.0224.87
TZOOTravelzoo Inc9.219.3621.67-3.19-9.2931.311.359.18-3.44N/A

Revenue growth for PCLN unsurprisingly has been very steady over the years while TZOO is not seeing much positive

 

Long Priceline (PCLN)

Priceline has been one of the most consistent stocks not only in the tech sector but in the overall market for over 10 years. It has been able to improve its core products but also make timely acquisitions to cover areas that it was lacking. Priceline is the clear leader in the online travel space and while I do expect to see TRIP gain ground at some point, there really is no one that can challenge PCLN giving me confidence that they will be able to maintain steady growth on top and bottom lines as more of the travel booking dollars move online.

Next earnings: May 3rd 2017


Short Travelzoo (TZOO)

Continues to be challenging for me to understand how Travelzoo (TZOO) could be trading at a comparable forward P/E to Priceline. Not only has the company displayed very little top or bottom line growth but I’m not seeing much in terms of product innovation in a fast changing environment. I personally see TZOO’s model in a similar way to what Groupon was built on which still works but is clearly not doing as well these days.

Next earnings: April 27th 2017

Disclaimer: Prior to opening this trade, I do not have a position on PCLN or TZOO

Crude Oil Is Not Yet in the Clear Despite OPEC’s Cut

By: ispeculatornew | Date posted: 03.15.2017 (3:00 am)

OPEC succeeded in getting its member nations and some other non-OPEC producers to agree to a deal to cut their oil output last year. The output cuts were necessary in order to halt the supply glut that has depressed oil prices for much of the last three years. The supply of crude oil has outpaced the demand due to the return of producers such as Iran and Libya as well as an increase in U.S. shale oil production.  However, it seems that the deal might be unraveling at the seams because some countries are not committed to holding their ends of the deal.

U.S. Shale oil cast dark shadows on the prospects of oil

Crude oil has managed to find support around $55 per barrel up from its $30 lows at the beginning of 2016. However, one would have expected OPEC’s deal to cut oil production to propel oil prices faster and higher towards the 2014 $100 per barrel price. The main reason oil prices haven’t spiked in tandem with OPEC’s move to reduce output is that the supply glut in oil is still persistent.

Interestingly, the supply glut situation has remained unchanged because U.S. Shale oil operators are now increasing their output from shale basins because of the uptrend in oil prices. Alex Poldoski an analyst at Saxon Trade observes that “the weak $30 price of oil made oil production unprofitable for shale oil drillers but the recent uptrend is encouraging shale operators to return to the markets.”

The U.S. Energy Information Administration said U.S. oil output increased by 1.7 million barrels in the week ended March 3. Interestingly, OPEC’s secretary-general Mohammad Barkindo acknowledges the influence of shale oil produces when he said “we did confess that we do not have sufficient understanding of how they operate and their impact on us.”

Saudi Arabia wants other countries to pick up the slack

Saudi Arabia oil minister Khalid Al-Falih expressed cautious optimism about the OPEC deal during his remarks at the CERAWeek that held earlier this month in Houston.  Al-Falih started by noting that the compliance level in deal to reduce output has outpaced the low expectations on OPEC’s ability to pull off the deal. In his words, “the market had low expectations, which we have exceeded by a large degree… We are definitely on the right track and are picking up speed in terms of delivery.”

However, the deal to cut production hasn’t done much to end the supply glut in oil; in fact, one can argue that OPEC’s supply cut is providing U.S. shale oil producers to increase their output. There are indications that OPEC might need to extend the deal to cut output beyond the first six months of this year if it really wants to end the supply glut in oil.

However, Al-Falih says there’s no point discussing the possibility of extending the deal beyond the first six months of the year if the other participants in the deal are not ready to uphold their ends of  the bargain. Last month, OPEC reported about 85% compliance in the deal to but the high compliance level was recorded because Saudi Arabia went out of its way to cut its output beyond its initial promise.

In Al-Falih’s words, “it is not going to be fair or acceptable that some countries will carry the burden for all… We’ve been willing to do it for the front end but we expect our friends and partners to pick up the slack as we move forward.”   Al-Falih’s also noted that Saudi Arabia “will not bear the burden of free riders… Saudi Arabia will not allow itself to be used by others. My colleagues have heard that privately, and now I’m saying it publicly.”

New Trade: Long Salesforce ($CRM) & Short Twitter ($TWTR)

By: ispeculatornew | Date posted: 03.06.2017 (3:00 am)

Today I am opening my 9th trade of the year in what has so far been a good year. As is always the case, you can see past 2016 (and previous years) 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
TWTRTwitter Inc15.75N/A37.33-3.1314.052.66.381.483.687.05N/A
CRMsalesforce.com Inc82.22N/A50.1920.7625.874.7310.771.0912.229.49-155.43

Revenue growth for TWTR is in freefall while CRM remains steady:

Long Salesforce (CRM)

Today I am taking the rare step of trading 2 names that could end up seeing M&A activity. In many ways, Salesforce is in a very tough spot as it continues to compete with the likes of Microsoft (MSFT) and Oracle (ORCL), two giants that among other benefits, already have strong and deep corporate relationships making it more challenging for Salesforce to get its foot in the door. For that reason, Salesforce has been rumored to be for sale and has also tried to make its own splash by (among other moves), making a bid for LinkedIn, strongly looking at acquiring Twitter, etc. In the end, CRM remains in a solid position thanks to an extremely solid offering and like many other SAAS product, it has tremendous loyalty from its customers over time. I do think it’s valuation is tricky and would hesitate to go long outright but I do think that when compared with Twitter, this is a solid trade opportunity.

 

Next earnings: May 25th 2017


Short Twitter (TWTR)

What a mess… I wrote an in-depth article about Twitter recently on SeekingAlpha:

http://seekingalpha.com/article/4043423-sad-story-twitter-told-recent-headlines

The company now seems serious about combating abuse but it is likely too little too late to stage a big turnaround. I do think that Twitter might end up being bought and as a user I’d like that to happen sooner than later to give it a better shot but as last year’s action clearly showed (where Salesforce the one serious bidder ended up not making an offer), finding a solid acquisition seems unlikely for the time being.

 

Next earnings: April 25th 2017

Disclaimer: Prior to opening this trade, I do not have a position on CRM or TWTR

New Trade: Long Amazon (AMZN) & Short Etsy ($ETSY)

By: ispeculatornew | Date posted: 03.03.2017 (7:35 am)

Today I am opening my 8th trade of the year in what has so far been a good year. As is always the case, you can see past 2016 (and previous years) 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
ETSYEtsy Inc10.66N/A38.73-9.2533.443.672.971.883.21N/AN/A
AMZNAmazon.com Inc848.91173.3644.9713.7627.084.7440.431.21286.8920.2453.25

Revenue growth for ETSY is quickly declining to AMZN’s levels despite being much smaller:

Here are the Google trends charts:

AMZN

ETSY

credit: Google Trends

How is it that Etsy, the much smaller player in a fast growing ecommerce sector isn’t growing much faster than AMZN? To me that is a tremendous warning sign.

Long Amazon (AMZN)

A few days ago I published a lengthy post about why I think despite its difficult valuation, AMZN is a must hold. I do recognize it will have its share of volatility, especially in shorter term periods but I think it’s a guaranteed (or as close to it as you can get) long term winner, you can read the full post here

http://seekingalpha.com/article/4049918-amazon-nearly-impossible-value-yet-remains-strong-buy

Next earnings: April 27th


Short Etsy Inc (ETSY)

I just closed a trade on ETSY after very disappointing earnings for Q4. I continue to be highly skeptical of ETSY’s current valuations, I don’t think it will be able to compete with the likes of AMZN and while it targets a different customer segment in many ways, AMZN has a tremendous effect on ecommerce in general putting high standards in terms of shipping, ecommerce, etc. That is putting pressure on smaller retailers like ETSY and I don’t think it can live up to its current valuation.

 

Next earnings: May 2nd 2016

Disclaimer: Prior to opening this trade, I do not have a position on AMZN or ETSY

Closing 2 Trades (PCLN, TWTR, NFLX, ETSY)

By: ispeculatornew | Date posted: 03.02.2017 (7:06 am)

This morning I will be closing 2 of the remaining 6 live trades which will open a couple more spots which will hopefully mean adding a new trade tomorrow. On February 1st I opened a trade going long Priceline (PCLN) and short Twitter (TWTR) which has done well and currently stands at +31,35% after a continued collapse by Twitter and once again Priceline beating on earnings. As always, you can see my 2017 (and previous years) long and short trades here:

http://www.intelligentspeculator.net/livetrades

The second trade that I’m closing was traded a couple of weeks ago when I went long Netflix (NFLX) and short Etsy (ETSY). Yesterday, ETSY got crushed after disappointing Q4 earnings so that trade now stands at +25.63%.