New Trade: Long Google (GOOG) & Short Valueclick (VCLK)

By: ispeculatornew
Date posted: 01.30.2012 (5:00 am) | Write a Comment  (1 Comment)

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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:

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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

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1 Comment

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