New Trade: Long Priceline (PCLN) & Short Twitter (TWTR)

By: ispeculatornew
Date posted: 02.01.2017 (7:11 am) | Write a Comment  (0 Comments)

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Today I am opening my 5th trade of the year between between 2 names that I have traded quite a bit over the years. As is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
PCLNPriceline Group Inc/The1575.1327.0621.569.299.264.64199.321.25181.0820.759.49
TWTRTwitter Inc17.62N/A28.283.9358.092.856.491.483.3599.28N/A

Long Priceline (PCLN)

For this trade, I wasn’t sure if I’d go long Priceline (PCLN) or Expedia (EXPE). Both have been solid performers and trade at comparable valuations but I do think a clear difference is that Priceline has been so steady over more than a decade. One truly impressive aspect has been its ability to generate both top and bottom line growth so consistently over time. That reduces the odds of a miss that could hurt this trade. For that reason, I’m going with PCLN even though it has (slightly) slower growth in recent quarters.

 

Next earnings: February 15th

Short Twitter (TWTR)

I have started writing a post about Twitter but the short story is that the company has been incredibly slow in improving its product and that is a big part of why its user growth has stalled. The company could be taken over of course but I think that’s a risk that’s worth it in these circumstances given its current valuation and growth perspectives. Twitter continues to be a great product to use and perhaps the application I spent most time on personally but it’s been unable to grow and I believe the issue is mostly around product execution rather than having a product that’s difficult to use or understand.

 

Next earnings: February 9th 2016

Disclaimer: Prior to opening this trade, I do not have a position on PCLN or TWTR
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