It is time for another trade and since I do not carry more than 5 trades live, I will have to wait for one to be closed before entering another one. This one is a play on internet websites dedicated to employment. On one hand, a company known by almost everyone; Monster Worldwide, which already had a very strong brand but has recently been putting up marketing campaigns including ads at the last Super Bowl. A lot of money being spent and the question of course is how much of it will pay off. I’m not a huge believer in Monster because I think the model is not as good as some other websites.
Few would argue that companies such as big banks are willing to put up more money to find the right candidates than the local grocery or store. Monster of course is not dedicated to those but it tries to be a universal solution and I believe that a strong focus on finance jobs for example can pay off (even in periods like this one where banks are not as agressive in their hiring.
Dice Holdings is not a very known company because it operates very specialized websites such as EFinancialCareers and JobsIntheMoney, but it has a strong business model and its websites, which much smaller than Monster’s, have been able to show good growth recently. There is risk of course in doing a trade on such a smaller player against the industry leader but I think the valuation makes this trade one I need to do. Just take a look at this table.
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Monster is not currently making any profits so earning ratios are difficult to compare but even when using next year’s estimates, I don’t think the valuations are right. It’s not as if Monster is growing much faster than Dice Holdings. In fact both are regressing in this tough job market but I would predict that the demand for Dice’s websites will stand higher than the overall market (i.e. higher than Monster’s).