New Stock Pick Long Dice Holdings (DHX) and Short MonsterWorldwide (MWW)

By: ispeculatornew
Date posted: 03.12.2012 (5:00 am) | Write a Comment  (0 Comments)

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It’s been a very active year so far, no doubt about it. Things have been decent and much more stable in recent weeks which I guess was to be expected with earnings season now behind us. I had a very tough time deciding on today’s trade as I did see 3 great trading opportunities, as you might have seen if you are a member of our free Tech Stocks Mailing list (if you’re not, what are you waiting for?):)

Today I am back with a familiar trade which in the end proved to be too good of an opportunity to pass up. I am trading the 2 job search engines companies, Dice Holdings and Monster Worldwide, which I’ve had success trading in the past. Let’s look at the numbers for these 2 stocks:

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And just look at this chart, it tells the story.. tell me how MWW is trading at a higher forward P/E:

5 Year Normalized Quarterly Revenues (1997-2011) For DHX and MWW

Long Dice Holdings (DHX)

It’s insane that we are once again back here. How is it possible that MWW is trading at a higher forward P/E than Dice Holdings despite history proving over and over that DHX growth is stronger, revenues and profits are improving faster. The brand is not as strong but that is not anywhere close to being a valid reason.

I am not a momentum trader but still look at Trend Analysis numbers and while DHX is not quite as strong as MWW, they are close enough.

Short Monster Worldwide (MWW)

Monster used to be a powerhouse, a highly respected web company that seemed to be leading the way towards a new way of recruiting and finding jobs. How things have changed. It is no longer at the cutting edge and its losing whatever edge it has very quickly. The company that tries to be the “everything solution” is losing business to LinkedIn (LNKD) but also to smaller companies that focus on geographical regions or specific industries (such as DHX). Think about it, Monster was making much more just a few years ago (both revenues and earnings) and I don’t see things improving quickly anytime soon.

Disclosure: No positions on Dice Holdings (DHX) or Monster Worldwide (MWW), this trade will be opened on Monday morning

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