New Trade: Long Dice Holdings (DHX) & Short Monster Worldwide (MWW)

By: ispeculatornew
Date posted: 01.17.2012 (6:11 am) | Write a Comment  (0 Comments)

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With US markets closed yesterday for MLK day, I will be opening both the trade announced yesterday (AAPL vs NILE) and this one, Dice Holdings (DHX) vs Monster Worldwide (MWW). Somehow, this is one of those pairs of stocks that often seems to be out of sync.

Both companies operate “job listing” properties but in very different ways. While Monster has worked hard to build a global brand, a network of sites that is used and known almost everywhere around the world and used for virtually any type of job, Dice Holdings has a fairly different strategy. The company manages a few different websites that generally specialize in one specific industry such as eFinancialCareer for the financial industry.

Let’s take a look at the numbers before going further:

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Long Dice Holdings (DHX)

The big number that I always look at is the estimated P/E ratio for next year. In this case, both companies have a nearly identical ratio which is certainly surprising because DHX has been able to increase revenues consistently by nearly 20%, that makes its current valuation very attractive in my opinion. The company is also able to focus on its properties much more than a broader company like Monster. The counter-argument though is that Dice Holdings relies on a few key industries such as the financial industry in order to achieve its growth.

Short Monster Worldwide (MWW)

In the past few years that I have been tracking tech stocks, Monster has been one of the very consistently overpriced stocks in my opinion (with Blue Nile-NILE) and I honestly do not see any reason why. At least, Blue Nile seems to have the potential to increase its sales and profits at some point down the road. I don’t see it with Monster. I think that by the time the company will have reached a large enough scale, rivals such as LinkedIn (LNKD) and perhaps Facebook will have taken their place as leaders. Monster has been unable to grow revenue anywhere near its numbers from 4-5 years ago. That is shocking in my opinion. Can the company turn things around? Sure, at some point. But I’m bettong that the stock will head lower before that happens.

Disclosure: Will go long Dice Holdings (DHX) and short Monster Worldwide (MWW) on Tuesday morning

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