It’s been a solid couple of weeks here for the stock picks. Things have been going well and that has helped our average trade get back to very solid levels. That being said, today’s trade was not as easy to find. I did send out some thoughts to the Tech Stocks Newsletter members just this morning with my feelings about quite a few stocks but the valuations are sometimes fairly close to what I believe they should be. In those instances, finding the right trade to add is not as easy so this weekend I did spent a bit more time but I’m very happy to say that in the end, I was able to find a good trading opportunity between 2 stocks at very similar forward P/E ratios, you can take a look at their numbers here:
Ticker Name Price EPS PE Ratio PE Next Year Return YTD Sales Growth Analyst rating Book Value Beta
TZOO Travelzoo Inc 26.44 0.2 20.31 15.17 2.77 31.53 4.6 2.46 1.57
YHOO Yahoo! Inc 15.57 0.82 17.68 14.34 (3.72) (21.19) 3.29 10.56 0.92
Long Travelzoo (TZOO)
Travelzoo has generally been a good stock to trade for me and it turned out very well went I went long TZOO just days after expressing why I believe Travelzoo represented a great opportunity. Among the companies that I follow, I think Travelzoo is very well positioned to face competition and continue to display strong growth. Thus, it’s P/E ratio seems very attractive at this level.
Short Yahoo (YHOO)
For some time now, I’ve avoided shorting Yahoo. At first it was mostly because of the possibility that a sale of its Asian assets (such as the very valuable Alibaba stake) would prove deadly to those who had shorted the stock. These days, things seem to have calmed down quite a bit on that front. That being said, I do think that a lot of the recent moves by Yahoo’s new CEO are very positive and will yield good results. It will take a decent amount of time for those results to turn into increase profits though so I feel like Yahoo’s current P/E ratio is too optimistic.
Disclosure: No positions on Travelzoo (TZOO) or Yahoo (YHOO), this trade will be opened on Monday morning