It’s been a solid couple of weeks here for the stock picks. Despite being unable to close out new ones, my average long&short tech stock trade now averages well over 5% giving an annualized return over 50% so far this year. It doesn’t quite matchup to last year’s return but it’s still good enough for personal satisfaction. Add that to the current 2nd place in the stock picking competition, and a very solid performance of my 2012 Tech Stock Power Rankings (more on that in a few days) and you get the picture.
Thankfully, today I get a new option to trade. After announcing that I would now own up to 7 tech long & short trades at once last year, this is the first time I get the chance to do it. This and the upcoming Facebook IPO (FB just confirmed it would be listing on Nasdaq) expected to occur in May, these are good and exciting times. Today, I am opening a trade between 2 stocks that have been getting crushed in recent months, as you can see in their dismal trend analysis scores:)
Ticker Name Category Price EPS PE Ratio PE Next Year Return YTD Sales Growth Analyst rating Book Value Beta
TZOO Travelzoo Inc TRAVEL 21.49 0.2 15.03 12.39 (12.57) 31.53 4.33 2.18 1.57
NILE Blue Nile Inc MERCHANDISE 29.59 0.8 37.94 29.1 (27.62) 4.54 3 2.54 1.28
Long Travelzoo (TZOO)
Well, funny how things happen. After spending much of last week researching Travelzoo, in order to determine if I did have regrets picking it as one of my 4 stock picks for 2012, I felt truly positive about the company. I did express my views on the company on Friday. Then, when looking through the companies that I follow this weekend, buying Travelzoo against Blue Nile seemed like a great opportunity. Why? They trade at comparable P/E’s despite having very different stories. I do think that this trade will end up doing very well:)
Short Blue Nile (NILE)
I know, I know, I look like a Blue Nile “hater”. I’m not. I’m just stunned over and over (and over and over) that the company continues to trade so expensively after so many years of continued disappointments. I did have a few successful trades already this year shorting Blue Nile against Apple 3 different times, all very successful trades!!! After that, I felt like I needed to get off of the bandwagon a bit in case NILE had a rebound. The stock has continued to fall though… but I still feel it’s overvalued. Clearly not as much as it was in January, but still overvalued. The company has absolutely no argument to justify its high price, its high P/E ratio, etc.
Disclosure: No positions on Travelzoo (TZOO) or Blue Nile (NILE), this trade will be opened on Monday morning