New stock pick: Long Apple (AAPL) & Short Blue Nile (NILE)

By: ispeculatornew
Date posted: 02.23.2011 (4:32 am) | Write a Comment  (3 Comments)

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We had intended on making a new pick on yesterday (since US markets were closed on Monday) but it has been a crazy past few days so here we go today. 3 out of the current 4 live trades are basically flat with the only exception being CTrip (CTRP) and Valueclick (VCLK) which is currently down 10%.  Valueclick recently reported earnings and I have lacked the time to go through the earnings and analyst call but I will do so shortly, and answer the pending question about it. I’ve said it many times in the past and will say it once more. The only objective here is to make money, I’m not trying to make original picks every time. So I will be opening up a new trade that is identical to one that was done last month, and closed successfully 10 days ago.

Before going further, here are the main numbers that we looked at:

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Trend Analysis

The trend analysis score favors Apple (AAPL) in a big way which has been the case for years it seems as NILE continues to be unable to gain much momentum.

Long Apple (AAPL)

It’s fairly easy for me to tell you why I want to be long of Apple but the basic conclusion is that despite its size, it continues to deliver strong earnings growth quarter after quarter and with a new Ipad & Iphone launch scheduled later this year, I don’t see that stopping anytime soon. Also, in light of yesterday’s precisions by Steve Jobs regarding the application of the new subscription plans, I think that it is a good idea and will help improve Apple’s margins over the medium run as the Apple world expands. I think the biggest downside risk of being long Apple right now remains the shaky health of Steve Jobs. The entire world he gets better soon and can return as the active day-to-day CEO, especially Apple shareholders. Apple without Steve Jobs is maybe not doomed, but things are different.

Short Blue Nile (NILE)

It seems like I could not be more negative on Blue Nile right? I have been going short on the stock time and time again but can you blame me for doing it? It did not work as well in 2009 but in 2010 it turned out great and so far in 2011, the initial short turned out good. To be fair, Blue Nile did improve its latest numbers but the stock continues to react as if NILE could somehow post growth numbers like Apple or Amazon. It’s not the case, hasn’t been and will not be anytime soon.

Just take a look at the charts for both companies:

Disclosure: I do not hold positions on either stocks

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3 Comments

  1. Comment by Neil — February 27, 2011 @ 9:27 pm

    Agree on the Apple, but don’t hold NILE below $52.

  2. Comment by IS — February 28, 2011 @ 7:13 pm

    @Neil – Why 52$?

  3. […] Google(GOOG) – Priceline (PCLN) – CTrip (CTRP) – Apple (AAPL) – Baidu […]

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