New Trade: Long Apple ($AAPL) & Short Blue Nile ($NILE)

By: ispeculatornew
Date posted: 03.02.2015 (3:00 am) | Write a Comment  (0 Comments)

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We’re 2 months in and the portfolio is up over 10% so I really cannot complain but I know that every time I open a short position, there is risk of a decent size loss so there’s certainly no reason to celebrate yet.

As is always the case you can see my long & short trades (from 2015 but also past years) here:

Let’s start off by looking at the numbers for today’s trade, two stocks that I’ve paired off against each other very often over the years:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg GrowthSales 5Y Avg GrowthEPS 5Y Avg Growth
AAPLApple Inc128.4617.313.916.766.954.3321.170.8430.0439.3248.25N/AN/A
NILEBlue Nile Inc29.9837.1225.46-

Not a surprise here and while NILE is not as great of a short as it once was (borrow remains expensive and not as overvalued) but if you look at this chart and tell me that NILE is (much) more expensive, it looks like a no-brainer. There just doesn’t seem to be that much upside in NILE.

AAPL Revenue (Quarterly YoY Growth) Chart

AAPL Revenue (Quarterly YoY Growth) data by YCharts

$AAPLLong Apple Inc (AAPL)

No shock here. I closed my long & short trade on Apple on Friday (but kept my bigger long position) mostly to take some gains but it’s not a surprise to most of you to see me jump right back in. Apple is a great stock for a few reasons but the main one is that the potential upside/downside risk remains incredibly positive to me. To have a stock that continues to dominate an exploding sector trading at such a low valuation screams buy. No, I don’t expect the stock to move by 40-50% in the next few months but I do think AAPL will continue to outperform the market thanks to its dominating iPhone, its ecosystem as well as mostly only upside from new product categories such as the Apple watch.


Next earnings release: April 23rd 2015

$NILEShort Blue Nile (NILE)

Shorting NILE is not a no-brainer because as I mentioned it’s expensive to borrow and it’s no longer trading at those crazy P/E ratios. That being said, a the company continues to be very disappointing and has not seen as much explosion as you’d hope. There are some stocks that I short but that I have real worry that they’ll explode higher because of a takeover offer or a big surprise in revenues/earnings. I don’t have that same fear with NILE (I’m probably jinxing it now) as I feel like the upside is limited. I also doubt the stock will decline much, it will be more a sideways move as has been the case for years.

ycharts_chart (1)

Next earnings release: May 1st 2015

Disclaimer: Long position on Apple and I will open this trade on today’s open

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