New Stock Pick: Long Google(GOOG) & Short Valueclick(VCLK)

By: ispeculatornew
Date posted: 03.14.2010 (5:00 am) | Write a Comment  (0 Comments)

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Here we are again looking for a new trade to execute and while taking a look at my stock screener, it now looks like the right time to go short on Valueclick, one of the more important online advertising companies. The major problem with Valueclick is that its technology and properties have fallen behind and are no longer on the cutting edge. Some years ago, Valueclick looked like an attractive target to major players such as Google (GOOG) and Yahoo (YHOO). But I don’t see that as being as likely right now. Valueclick’s sales have been drowning. Here is a quick summary:

TickerNamePriceDividend YieldPayout RatioEx-Dvd
DODiamond Offshore Drilling Inc3310.6288.6910/30/2014
RIGTransocean Ltd30.159.9563.7911/12/2014
WINWindstream Holdings Inc10.949.14250.7712/31/2014
ESVEnsco PLC38.267.8436.912/11/2014
NENoble Corp plc20.247.4125.211/13/2014
FTRFrontier Communications Corp6.446.21362.4212/09/2014
IRMIron Mountain Inc33.15.74213.9112/24/2014
HCPHCP Inc40.15.44106.9211/06/2014
CTLCenturyLink Inc415.27#VALUE!12/04/2014
TAT&T Inc35.365.253.1310/08/2014
HCNHealth Care REIT Inc62.785.073110.7711/06/2014
TETECO Energy Inc17.754.9696.6611/10/2014
MATMattel Inc31.7754.7855.211/24/2014
SOSouthern Co/The44.144.76107.3611/06/2014
PMPhilip Morris International Inc84.514.7368.0712/23/2014
VTRVentas Inc62.744.62164.0612/17/2014
PBCTPeople's United Financial Inc14.464.5687.6710/29/2014
RAIReynolds American Inc59.444.5179.112/10/2014
MOAltria Group Inc46.194.581.2112/22/2014
PCLPlum Creek Timber Co Inc39.224.49135.5111/12/2014
PPLPPL Corp33.484.4579.7912/09/2014
KMIKinder Morgan Inc/DE38.864.43138.4810/31/2014
VZVerizon Communications Inc49.714.4251.7310/08/2014
EDConsolidated Edison Inc57.034.4267.8911/10/2014
SCGSCANA Corp48.524.3360.312/10/2014
FEFirstEnergy Corp33.494.3245.2302/04/2015
ETREntergy Corp77.824.2783.1111/10/2014
DRIDarden Restaurants Inc51.594.26157.3710/08/2014
DUKDuke Energy Corp75.174.2382.3811/12/2014
TEGIntegrys Energy Group Inc65.624.1561.8411/28/2014
AEEAmeren Corp38.894.1175.8112/08/2014
KIMKimco Realty Corp21.964.1174.4812/29/2014
PNWPinnacle West Capital Corp55.534.0960.3110/30/2014
LOLorillard Inc60.274.0869.9211/26/2014
POMPepco Holdings Inc26.794.03245.4512/12/2014
SPLSStaples Inc11.9554.0244.2612/24/2014
PCGPG&E Corp45.54100.6112/30/2014
PEGPublic Service Enterprise Group Inc37.263.9758.5712/05/2014
XELXcel Energy Inc30.613.9258.4312/23/2014
COPConocoPhillips74.773.9141.6610/09/2014
FCXFreeport-McMoRan Inc32.323.8784.8210/10/2014
MACMacerich Co/The64.323.86252.3511/12/2014
COHCoach Inc35.113.8547.8812/05/2014
CNPCenterPoint Energy Inc24.733.84114.1511/14/2014
GASAGL Resources Inc51.263.8270.9311/19/2014
GRMNGarmin Ltd50.453.8157.4412/11/2014
AEPAmerican Electric Power Co Inc52.873.7864.4611/10/2014
KRFTKraft Foods Group Inc56.33.7345.0510/13/2014
CINFCincinnati Financial Corp47.633.752.2212/15/2014
CVXChevron Corp117.713.6734.8911/19/2014
CACA Inc27.463.6450.3911/18/2014
CMSCMS Energy Corp29.993.659.6911/05/2014
DTEDTE Energy Co76.873.5968.5312/18/2014
MCDMcDonald's Corp94.863.5855.7611/26/2014
OKEONEOK Inc64.253.58117.511/05/2014
WECWisconsin Energy Corp43.813.5656.9611/12/2014
PFEPfizer Inc29.223.5657.6811/05/2014
EXCExelon Corp34.883.5673.5511/17/2014
LEGLeggett & Platt Inc34.993.5487.7112/10/2014
PLDPrologis Inc37.633.51288.8212/18/2014
GEGeneral Electric Co25.43.4653.1112/24/2014
NUNortheast Utilities45.553.4558.8712/09/2014
FFord Motor Co14.593.432210/28/2014
PAYXPaychex Inc44.323.4381.3710/31/2014
DDominion Resources Inc/VA70.043.4372.8812/03/2014
CVCCablevision Systems Corp17.773.42122.8611/13/2014
SESpectra Energy Corp39.263.4180.5611/12/2014
LMTLockheed Martin Corp178.343.365211/26/2014
PSAPublic Storage167.63.34105.0212/08/2014
GMEGameStop Corp40.463.2637.2111/28/2014
AVBAvalonBay Communities Inc142.693.26932.9412/30/2014
GISGeneral Mills Inc50.473.2553.4110/08/2014
AIVApartment Investment & Management Co32.223.2431414.2711/12/2014
KKellogg Co61.193.236.1611/28/2014
EQREquity Residential62.613.19#VALUE!12/18/2014
WMWaste Management Inc47.63.15696.9411/28/2014
SPGSimon Property Group Inc165.813.14111.9611/10/2014
KMBKimberly-Clark Corp107.73.1258.0812/03/2014
ADIAnalog Devices Inc47.583.160.3212/03/2014
HASHasbro Inc55.423.172.8810/30/2014
MCHPMicrochip Technology Inc46.133.0971.1411/18/2014
SYYSysco Corp37.73.0872.3101/07/2015
WUWestern Union Co/The16.243.0834.7212/18/2014
PBIPitney Bowes Inc24.383.0862.6411/12/2014
NEENextEra Energy Inc94.233.0865.1111/26/2014
STXSeagate Technology PLC56.083.0735.8511/03/2014
CLXClorox Co/The96.473.0766.1610/27/2014
PGProcter & Gamble Co/The83.793.076110/15/2014
CSCOCisco Systems Inc25.313.0147.8501/02/2015
OXYOccidental Petroleum Corp95.96334.8412/08/2014
CAGConAgra Foods Inc33.333140.910/29/2014
LLYEli Lilly & Co65.672.9844.8911/14/2014
CPBCampbell Soup Co42.452.9450.8810/08/2014
MRKMerck & Co Inc59.92.94116.5312/11/2014
VNOVornado Realty Trust99.822.93#VALUE!11/05/2014
NUENucor Corp51.982.8596.7412/30/2014
BMYBristol-Myers Squibb Co50.852.8490.4401/07/2015
WYNNWynn Resorts Ltd182.282.7496.5911/07/2014
MWVMeadWestvaco Corp41.362.4255.3111/25/2014
CMECME Group Inc/IL80.952.32151.0612/05/2014

Scary hey? Of course, because of this, Valueclick trades at a very low P/E ratio but I still consider that it is too high, especially when I compare it with the ratios of Google. Bloomberg estimates that Valueclick’s P/E ratio for next year will be 13.46 while Google’s will be 18.54. Google has been struggling to find high revenue growth (mainly because its revenues come almost exclusively from one source) but when you compare its growth to Valueclick, it looks much more attractive.

While Google has been trying various different strategies to generate new revenues, Valueclick seems content on remaining still. Of course, that is not good enough. With diminishing sales, there are few ways to make profits apart from cutting costs, and you can only do that to a certain extent. To give you an idea, just take a look at the Press Page on Valueclick’s page, there is nothing new in recent months. Compare that to Google which is launching almost one new product or initiative every week and you can understand why Valueclick is falling behind.

Here is a quick comparison of both firms financially:

TickerNameSharesOct 16 2014 PricesOct 16 Values
OMCOmnicom Group Inc32$66.16$2,117.12
MSFTMicrosoft Corp75$42.74$3,205.50
JCIJohnson Controls Inc43$40.69$1,749.67
PEPPepsiCo Inc/NC31$90.79$2,814.49
ETNEaton Corp34$59.92$2,037.28
DOVDover Corp27$73.44$1,982.88
ITWIllinois Tool Works Inc37$83.07$3,073.59
XLNXXilinx Inc40$38.49$1,539.60
SJMJM Smucker Co/The22$97.88$2,153.36
BLKBlackRock Inc14$310.69$4,349.66
TROWT Rowe Price Group Inc32$75.43$2,413.76
OXYOccidental Petroleum Corp25$86.44$2,161
XOMExxon Mobil Corp22$90.60$1,993.20
ADIAnalog Devices Inc47$44.60$2,096.20
HASHasbro Inc32$54.21$1,734.72
MATMattel Inc46$29.62$1,362.52
AFLAflac32$55.86$1,787.52
BAXBaxter International27$68.18$1,840.86
IVZInvesco Ltd70$35.85$2,509.50
CVXChevron21$111.06$2,332.26
TXNTexas Instruments Inc33$43.59$1,438.47
VWOVanguard FTSE Emerging Markets74$40.63$3,006.62
BNDVanguard Total Bond Market36$82.97$2,986.92
Cash$2,401.53
USDP$55,088.23
SPX17.0219547$3,395.03$57,790.05

Finally, here are the stock charts for both stocks. You can see how Google has now moved above its 50 day moving average and could hopefully break out to the upside. Google’s stock has suffered greatly this year but I am counting on a rebound with hopefully good results in Q2 (to be announced in April).

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