Long Apple ($AAPL) & Short Travelzoo ($TZOO)

By: ispeculatornew
Date posted: 07.29.2013 (3:00 am) | Write a Comment  (0 Comments)

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Before getting into my new long & short pick, I will be closing out 2 of the existing ones this morning. They both had fairly “extreme” returns last week when earnings came out for Facebook (good) and Expedia (bad). As of this morning, returns for the 2 trades are:

Long Facebook (FB) & Short Blue Nile (NILE) +53,83%
Long Expedia (EXPE) & Short Orbitz (OWW) -32,27%

Overall it was a decent week but obviously following the strong Facebook earnings, I was hoping for better. Oh well! Just to clarify, I will remain long Facebook. My bigger position is the long term speculative pick I made. The long & short picks that I do are shorter term in nature so I’ll take the gain on this one and perhaps buy it again soon. I thought about doing it again today but there’s a decent chance the stock will give back a bit after such strong gains.

Today, I am opening a new trade between two very unrelated stocks. I usually don’t go for such pairs but as you know, I’ve been very bullish about Apple and with the last earnings now behind us and many product launches in the next few months, I think the upside vs downside is very much in Apple’s favor. I looked for stocks to short against it and ended up going for Travelzoo. Let’s start off by looking at the numbers:

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And the quarterly Y/y revenues growth:

AAPL Revenue Quarterly YoY Growth Chart

AAPL Revenue Quarterly YoY Growth data by YCharts

$AAPLLong Apple (AAPL)

After discussing how much value there was in holding Apple for months while seeing the stock crumble.. I finally ended up taking a position in April while the stock was trading under $400. It has rebounded quite a bit since then but through some bumpy ups and downs. The big worry in holding a stock like Apple is on earnings releases, especially when no new products have been launched (and customers all around the world hold on to their money until the new products come out). That time is now over with Apple having announced better results than expected and with several new products being launched in the upcoming weeks. It certainly seems like a good time to buy Apple and here I go:)


Next earnings release: October 24 2013

$TZOOShort Travelzoo (TZOO)

I did not see an obvious stock to short against Apple and ended up going for Travelzoo. Why? I don’t see anything that justifies its current valuation. Sales are growing very slowly and that whole business (deals, etc) does not seem to be doing as well in recent months. I see little risk of being short Travelzoo right now, especially with no earnings for the next 3 months.


Next earnings release: October 25th 2013

Disclaimer: Long Apple (AAPL)

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