New Stock Pick Long LinkedIn (LNKD) & Short Pandora (P)

By: ispeculatornew
Date posted: 05.14.2012 (5:00 am) | Write a Comment  (1 Comment)

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Wow, another brutal week as my average trade return is profitable this year but not by much and not anywhere close to last year’s very solid results. Today, I’m opening a trade that I opened just a few months ago with success.  This one comes as no surprise for the IntelligentSpeculator Tech Mailing List members (free to join if you are interested!).

Let’s look at the numbers for these 2 stocks:

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I’d like to invite you to see this chart of quarterly revenues for both companies, the same chart that I posted for the last trade, I had also written the following:

“If I told you that the fastest growing company (LNKD) was also profitable (while P isn’t), that it faces little competition, is expected to increase profits significantly this year (while P will lose money this year and even next)… would you believe me if I told you that LNKD was trading at a lower forward P/E????? Crazy, I know.”

Long LinkedIn (LNKD)

A company that I love, that I truly believe in and that I think will end up doing extremely well, perhaps even better than the soon to be public Facebook. That being said, it is trading at a very high P/E, one that makes it very difficult to trade. The only way I’ve seen so far is trading it against another very high P/E stock.

I am not a momentum trader but still look at Trend Analysis numbers and the numbers certainly look promising on this trade.

Short Pandora (P)

Not a big surprise to see me short Pandora, which was near the very bottom of my 2012 Tech Stock Power rankings this year at #29. It has been losing money for years, will be losing some again this year and is actually expected to lose over $0.15 per share in 2013. Seriously!? Sure, revenues have been increasing but not nearly quickly enough. The company continues to face tons of competition and is trading at a forward P/E that implies very strong growth and a profitability in the very near term. I doubt either will happen so it’s a fairly easy short.

 

 

Disclosure: No positions on LinkedIn (LNKD) or Pandora (P), this trade will be opened on Monday morning

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1 Comment

  1. […] New Stock Pick Long LinkedIn (LNKD) & Short Pandora (P) […]

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