As I wrote in this weekend’s tech newsletter, while most of my 2012 picks are doing very well (see the power rankings, the yearly stock picks competition, sustainable dividend portfolio and others), my tech long & short stock picks have clearly come up short this year so far as they have been in negative territory for a few weeks now. Hopefully today’s trade will mark the start of a turnaround as I go back to the basics, shorting a stock that I have shorted over and over in the past few years with a lot of success!
Let’s start off by looking at the number for TripAdvisor and Blue Nile:
Ticker Name Price EPS PE Ratio PE Next Year Return YTD Sales Growth Analyst rating Book Value Beta Earnings
TRIP TripAdvisor Inc 46.36 1.33 N/A 24.7 83.54 31.45 3.42 2.64 N/A 2012/07/24
NILE Blue Nile Inc 29.27 0.8 46.00 28.89 (28.11) 4.54 3 2.89 1.33 2012/08/03
Long TripAdvisor (TRIP)
I did get burned trading TripAdvisor shortly after it was spun off from Expedia (EXPE). If you look at the stock’s chart, you will see that there are very moments where that could have happened. The company continues to do very well and while it does have its challenges, I do think it will continue to do very well even in this difficult economic context mostly because of how social its product is. Its integration of Facebook is being taken to new levels where you will be able to see what friends (and their friends) have experienced making it even more personalized.
Short Blue Nile (NILE)
Ahh Blue Nile is the stock that keeps being shorted. It’s an expensive stock to short at most brokers so it’s not a trade you’d hold on for years but the stock continues to underperform. That is not a big surprise of course when you see how expensive the stock is considering its lack of growth in both revenues and earnings. The company operates at almost zero margins while not seeing growth, it’s difficult to see much positive about Blue Nile really.
Disclosure: No positions on TripAdvisor (TRIP) or Blue Nile (NILE), this trade will be opened on Monday morning