Today I am opening my first 2 trades of the year As you can imagine, it will be nice to start from scratch following a not great year of long & short trading in 2016!! 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:
Ticker | Name | Price | PE Ratio | PE Next Year | Return YTD | Sales Growth | Analyst rating | Book Value | Beta | Earnings | Mkt Cap | Revenue/Share | Sales 5Y Avg Growth | EPS 5Y Avg Growth |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
EBAY | eBay Inc | 29.69 | 18.85 | 14.38 | 9.1 | -2.25 | 3.51 | 6.1 | 1 | 1/25/2017 | $33,520,000,000.00 | 7.11 | -2.48 | 0.74 |
GOOG | Alphabet Inc | 771.82 | N/A | 18.94 | 3.15 | 13.62 | 4.8 | N/A | 1.21 | 1/26/2017 | $546,000,000,000.00 | #VALUE! | 18.73 | 14.78 |
FB | Facebook Inc | 115.05 | 44.92 | 22.09 | 11.17 | 43.82 | 4.64 | 18.78 | 1.04 | 1/25/2017 | $336,200,000,000.00 | 6.4 | 49.44 | #VALUE! |
PYPL | PayPal Holdings Inc | 39.47 | 35.02 | 23.03 | 10.39 | 15.24 | 4.15 | 11.77 | N/A | 1/25/2017 | $48,220,000,000.00 | 7.57 | #VALUE! | #VALUE! |
And the usual chart that I like to bring up:
Long Alphabet (GOOG) & Short eBay (EBAY)
I think it’s fair to say that times have changed at Google.. uhm.. I mean Alphabet. The company has doubled down on getting its spending under control and I think that was a smart and necessary move. Moonshots make sense and will remain part of Google’s core. I don’t think there are any doubts that some of them, including AI, self-driving, etc will end up having significant commercial applications and I am a believer in those segments of the company. But having no restrictions on the spending makes very little sense in my opinion and the cost-cutting that is happening will bring important benefits to the company. On the other side, I remain highly skeptical of ebay’s place in the online shopping marketplace in a world where Amazon’s dominance continues to increase month after month in almost every measurable way.
Long Facebook (FB) & Short Paypal (PYPL)
Facebook and Paypal are two clearly different companies and while you probably know that I have a deep level of admiration for Facebook’s execution, I also think Paypal is very well positioned and much more difficult to displace than believed by most. That being said, I do think PYPL’s valuation is very difficult to justify when I compare to how much growth Facebook is able to achieve. Yes, both are likely in declining growth periods but I do remain optimistic about Facebook’s position.
The chart is for different stocks then what you’re discussing.
@Ken – Thank you, just fixed that!