Opening 2 New Long & Short Trades ($FB, $EBAY, $EXPE, $NILE)

By: ispeculatornew
Date posted: 09.23.2015 (3:00 am) | Write a Comment  (0 Comments)

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It has taken too long but I am finally able to open a few new trades after closing 2 of the existing ones last Monday. Given the lack of time between now and month end, I prefer doing 3 today with a brief explanation and then getting back to more lengthy explanations.

As is always the case you can see my long & short trades (from 2015 but also past years) here:

http://www.intelligentspeculator.net/livetrades

You can also see the numbers for the 6 stocks that will be traded today here:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaEarningsRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
EBAYeBay Inc25.6110.313.329.7411.563.5616.260.8810/14/201514.3114.876.07
FBFacebook Inc92.95797.534.8822.4758.364.6714.020.8510/28/20154.7758.4N/A
EXPEExpedia Inc124.8835.4722.0748.8620.83.8616.351.1410/29/201544.7114.981.95
NILEBlue Nile Inc32.9739.6523.48-6.415.224.140.770.710/30/201538.998.446.53

FB_EBAY_EXPE_NILE_chart

 

$FBLong Facebook (FB) & Short eBay (EBAY)

Over the years, I have traded eBay (EBAY) several times and explained why I was treating it as an online bank. In short, the growth in EBAY was coming from its Paypal (PYPL) unit. Now that PYPL is gone, EBAY is a whole different company and one that I’m extremely skeptical about. Yes, Ive seen them looking into same day shipping (which it finally killed) and other experiments in order to better compete with the likes of Amazon (AMZN). On the other hand, Facebook (FB) has such a strong position in the new “web” thanks to its very strong app presence. While it is priced at a much higher forward P/E, I do believe Facebook continues to have a very strong profile compared to its valuation

FB_EBAY_EXPE_NILE_chart (1)

Long Expedia Inc (EXPE) & Short Blue Nile (NILE)

This trade is one between two stocks that trade at almost identical forward P/E’s. Once again, I consider Blue Nile (NILE) to be overvalued. The stock is growing sales 4 times slower than EXPE but trading at identical ratios. Expedia has also historically been able to maintain higher margins and I do think it’s one of the few online travel companies that will be able to perform well in the coming years. Contrast that with NILE which will continue to face strong competition and there’s always the potential of seeing Amazon get involved in the business.

Disclosure: I have long term sustainable positions on Facebook (FB)

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