We are on a roll aren’t we? After publishing our first two stock picks of the year on Monday (AAPL/NILE) and Tuesday (PCLN/IACI), we are ready to go with a third stock pick, this time between two online job listing websites. They operate in the same business but in very different ways and I honestly think Dice Holdings’ method is superior and will generate better return for shareholders over the long term. Of course, it is battling a giant and the competition will remain a challenge.
Before getting started, here are the main numbers that I used to decide on this trade:
Ticker Name Price EPS PE Ratio PE Next Year Return YTD Sales Growth Analyst rating Book Value Trend Analysis
DHX Dice Holdings Inc 14.43 0.22 55.23 31.42 119.24 (29.04) 3.29 2.61 90
MWW Monster Worldwide Inc 23.63 0.16 #N/A N/A 50.8 35.46 (32.63) 3.5 9.32 80
Both stocks have very strong scores for their trend analysis but Dice Holdings (DHX) has a slight edge.
Long Dice Holdings (DHX)
While Monster has one giant property (with regional differences), Dice Holdings operates in a different way as it has very targeted websites that will help its clients and users find jobs in niche websites. The top property remains efinancialcareers.com, which has been struggling for obvious reasons (financial sector struggles) but I still think the model is easier to build as sectors can be so different from one to another. To be honest, I’m far from convinced about Dice Holdings as a company and would probably not go long only on DHX. Why? Because I think they will face increasing competition from free websites/search engines. Indeed.com is now the top job website in fact! That being said, both Monster and Dice Holdings will face this threat so they are easy to trade against each other. The main thing is that on a valuation basis, I feel like DHX is much cheaper and attractive.
Short Monster Worldwide (MWW)
Monster is a huge brand and has certainly enjoyed a lot of success through that brand but other than that, the performance has been unimpressive. While Dice Holdings has seen very bad sales growth, Monster has done even worse and remains unable to convince investors that it is going in the right direction. I have been tracking Monster’s recent earnings call and have yet to be convinced that Monster has a true plan. It is all about integrating and that certainly works well for multinational firms but I’m not convinced that it’s as great for smaller companies. Overall, I just think that for two companies running a similar business model, Monster is way too expensive.
Just take a look at the charts for both companies:
Disclosure: I do not hold positions on either stocks