Ah well, after some early jitters and 3 great trades to start off the year, today was an awfully bad day. TripAdvisor (TRIP) which I have been very positive about and even decided to buy despite the fact that it was such a recent IPO. My basis was that the company had been around for a long time. Yesterday, TRIP announced earnings that were decent but were well below what analysts had been expecting.

Revenue jumped 30% to $137.8 million while profits rose 19% to $22 million ($0.16 EPS). It’s not great but certainly not terrible either. However, from the looks of it, most expected way better and also expected better guidance.

The impact this morning was brutal with TRIP trading down 15% or so… I thus easily reached my stop loss at today’s close and will be closing out the trade on tomorrow’s opening. That and a bad start to my GOOG/VCLK trade have taken down my average trade return down to 2.89%

Still not too bad:) But I will learn from this. I have been asked about providing more post-trade analysis and I would say that it’s difficult to draw conclusions from most trades. On this one however, I made a clear mistake that I should have known about. There is a reason why I tend to stay away from newly issues stocks. The first few days of course always have more volatility than I’d really like.

The bigger reason though is that it’s always tempting for companies to make their financial statements look better or worse in the few quarters before turning public. There are perfectly legal ways to do this and I usually prefer to wait a few quarters before making a trade to see if growth can keep up.

I Thought TRIP Was Different

For some reason, I thought that TRIP would be different. Since it was part of the already public Expedia (EXPE), I expected that the statements would provide a fairly accurate image. I’m not saying that they didn’t but it’s true that Expedia had a lot of business with TRIP so even if it did intend to provide accurate statements, it certainly makes it very tricky to do so. Was EXPE paying TRIP enough for its traffic, did that cost change? There are plenty of valid questions. Especially when you consider that in the previous quarter, 34% of TRIP’s revenues came from Expedia while that proportion dropped to 27%… not saying it’s fishy but.

I will certainly spend more time looking into all of this and will continue to provide more thoughts both here and in the technology stocks newsletter which you can join for free:

On a side note, Expedia (EXPE) which was reporting last night also ended up coming up with disappointing results, though I’m not sure how related both of those numbers are but it’s certainly possible that the entire online travel industry is suffering a bit these days.

The year started off amazingly well as 3 of the 4 first trades that I opened closed out early, all making significant profits but since then, things have calmed down quite a bit. I did update the stock picks results page and hopefully I can keep seeing more early exits but these results are more “typical”. As much as I’d like for stocks that I consider undervalued to rise days after my picks, it is likely to take more time.

I would also like to invite you to see how I calculate my returns for long & short tech stocks.

Today I had a more difficult time finding the right stock pick and even did contemplate shorting Groupon (GRPN) but as I’ve explained in the tech stocks newsletter (join now if you have not done already), I’m trying to resist that for now. So today I open a 5th trade:)

Let’s start off by looking at the numbers:

Long Travelzoo (TZOO)

Travelzoo made the top 10 in my 2012 Tech Stock Power Rankings in good part because the company continues to be very targeted towards its goal of high growth. There is certainly less hype than there was a year ago when the stock made it to $100 or so… Now the stock is down over 70% but I am a believer as the financials continue to look good.

Short IAC Interactive (IACI)

IAC Interactive has been able to grow much faster than I would have expected thanks to many of its segments, even including search. Who knew people used Ask.com to search the web:) On a more serious note though, I do not expect that performance to keep up. Even if it did, keeping up with the very impressive Travelzoo seems very unlikely which presents a great trade opportunity since they trade at comparable P/E ratios.  IAC will start paying a dividend which is great for dividend investors but does not indicate that growth opportunities abound.

Disclosure: No positions on Travelzoo (TZOO) and IAC Interactive (IACI) but this trade will be opened on Monday morning

I’ve written a few times about how looking at dividend yield could be misleading. One part of the reason is that some companies end up paying more than they can afford to. FTR is one obvious example and I will discuss it a bit later but there are many more.

Can you believe that none of the top 20 companies in this chart have a payout ratio under 50%!! To me that is shocking.  Dividend investing is about much more than finding a big yield, it is about finding longer term stocks that will be able to increase their dividend yields over time.

I wrote about why dividend investing is not just a trend and I think that finding the right stocks to include is a critical part.

Today, we are back with our list of the top 100 dividend stocks from the S&P500 and there is no surprise in who is on top. I would caution greatly against investing based only off of a dividend yield though.

Frontier Communications Corp (FTR)

No big surprise again this month as Frontier Communications Corp (FTR) remains at the very top of our top dividend stocks in the S&P500 with a dividend yield over 17%.  Why is that yield increasing every month? 2 reasons:

-The stock’s price keeps diminishing
-No one expects the company’s dividend to actually remain so high

The dark side of course remains that the company is paying out much more than it is actually able to make, making that dividend everything but sustainable. Every month, I do more in-depth research to find dividend names and FTR has never come out on top of that research..!!

We highly recommend that you join our free newsletter to receive more analysis and research about such stocks, sign up here for Free!

FTR’s Dividend Payout History

FTR’s days at the top of this chart are nearing its end in my opinion. Not only is FTR going to likely announce a dividend cut later this month but if things keep up, it will not be able to remain in the S&P500… should be interesting! Next week, we will do further research on the 100 stocks listed here to determine which ones are more likely to do well in the long term both based on sustainability and the 20 things that we look for in dividend stocks.

In the meantime, here is the list!

2012 has been a great year so far in terms of trading. I have opened 6 trades with 3 of those already have reached their “stop gain” limits…! I would like to reach my new limit of 7 open trades but I certainly can’t complain about how things have been going so far. I’ve also received many great questions about the trades both on the blog and in the tech newsletter (join now if you have not done already), I am getting through them, but appreciate all of the feedback. I am certainly feeling less nervous than just a few weeks ago.

I would also like to invite you to see how I calculate my returns for long & short tech stocks.

Today I am opening a trade that I was looking forward to doing. I wanted to go long Google against Valueclick, two advertising plays because I think that as the industry evolves, Google will end up doing much better. I wasn’t confident about Google’s earnings though and I turned out to be right to not buy Google ahead of its earnings. Now that the stock has declined, I am ready to go ahead!

test Tech Stock Power Rankings and while it was even more attractive a few weeks ago, I still think it’s a great buy and AOL is in many ways a very easy stock to short.

Let’s start off by looking at the numbers:

Long Google (GOOG)

Google, an incredible power and one of the top names in my 2012 Tech Stock Power Rankings but the company did come up short of most forecasts. I do still think the company is a great buy at this price and there is no logic to me of having Google and Valueclick trading at similar P/E ratios for next year. Clearly, Google has a ton of momentum in social (not likely to have an impact in revenues/profits soon) but also in mobile through Android (this one will!), I think Google will continue to increase revenues at a quick pace and is well positioned despite the soft advertising market.

Short Valueclick (VCLK)

Valueclick used to be a company that I truly believed in. Being a small player competing against the likes of Google (GOOG), Facebook (FB), Yahoo (YHOO) and others has made things very difficult for Valueclick though. It is simply having trouble coming up with enough innovative solutions to keep up with competitors and while the revenues have increased significantly in recent quarters, I don’t see that keeping up. I don’t think there is any doubt that GOOG can outperform in terms of growth.

Disclosure: No positions on Google (GOOG) or Valueclick (VCLK) but this trade will be opened on Monday morning

For a third time this year, I am able to close a trade, the one where I went long Dice Holdings (DHX) and Monster Worldwide (MWW) which currently stands at +29,27%. How did it get to this point? Mainly thanks to Monster which announced disappointing results, as has often been the case lately. They also announced lower revenues and profits expectations than most analysts expected sending the stock down over 20% today…!

It’s a “deja vu” feeling in.. I am reopening the same trade that was done earlier this year and closed with a very nice return a week later. You would think that with a universe of over 40 tech stocks that I follow, I could come up with different pairings but apparently not so far. I don’t mind honestly. Tripadvisor (TRIP) is one of my favorite stocks as you saw in the latest Tech Stock Power Rankings and while it was even more attractive a few weeks ago, I still think it’s a great buy and AOL is in many ways a very easy stock to short.

Today, I decided to open a trade based on this concept. Let’s start off by looking at the numbers:

Long TripAdvisor (TRIP)

I am getting slightly worried. If you remember well, at some point, I started worrying about having fallen for Google’s (GOOG) stock, I couldn’t see much downside about the company and thought it was such an incredible investment that I probably could have paired it off against almost any other stock. These days, Apple would be that stock but TripAdvisor is also right up there. To me, the lucrative online travel industry is quickly being taken over by TRIP. Have you booked any type of trip recently? If so, chances are that you spent some time on Tripadvisor.com getting feedback about a hotel, activity, restaurant, etc. It is that good and despite attempts by competitors, nothing comes close right now and the community is only making it stronger, in a similar way to Facebook.

Another great part is that TRIP is one of Facebook‘s partner making its relationship with the users deeper and stronger. I do think the company will continue to see significant opportunities and is a great investment going forward.

If you are looking for more info about my views on TRIP, I invite you to read my post about the company from a few weeks ago.

Short AOL (AOL)

Agreed, not much has changed for AOL since the start of the year, no good or bad news.  AOL is scheduled to report earnings in a little less than 2 weeks which is pretty much as close as I could accept right now. With Google coming up short, I don’t see any particular reason that would justify great results by the company led by Tim Armstrong. The costs will continue to be very high and with the economy still being very shaky, I don’t think there is any way it could come out with breakout numbers.  It will however be very interesting to see what type of news they can come out with and if they can define their strategy more clearly.

Disclosure: No positions on TRIP or AOL but this trade will be opened on Monday morning