New Trade: Long Apple ($AAPL) & Short Monster Worldwide ($MWW)

By: ispeculatornew
Date posted: 01.28.2016 (5:02 am) | Write a Comment  (0 Comments)

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Today marks the second long & short trade of the year and this one will also not come as a surprise to regular readers. To start off, all of my long & short trades are always available (for 2016 but also past years) here:

Yesterday started off very well as I bought Tripadvisor (which was knocked down by a Goldman Sachs downgrade). To be honest, that’s not a big source of concern although I will try to get my hands on that report and certainly get back to you with more thoughts. The impact though was TRIP starting off with a much lower starting point.

First off, here are the numbers for both names:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthBook ValueRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
MWWMonster Worldwide Inc4.88230.318.5-13.96-4.654.788.75-5.83N/A
AAPLApple Inc93.4210.69.8-5.0127.8623.1340.6225.5634.76

And here is the growth in revenues for both in the past few quarters:


It’s easy to get negative about Apple, but I think that almost any number of chart will speak for itself here. First off let’s compare both:

$AAPLLong Apple (AAPL)

No surprise here is I’ve been very vocal in my belief in the Apple stock for years so when one of the ecosystem plays comes down, it’s always tempting to add to my already existing significant position. For today though, I just want to focus on the fact that a lot of the negativity in recent days is focused on the growth story being over for Apple with many warning of a first decline in the number of iPhones sold. That is a fact and not one I’d argue, but it’s also a fact that year had an extraordinary 1 year-bump coming from the long anticipated introduction of larger screens. That made this year an “impossible” comparable. I do think the long term growth story is still very much alive and others such as Ben Thompson agree. Apple remains the dominant smartphone ecosystem not in terms of number of users but in terms of revenues for developers (that lead is not declining), of valuable traffic (which is why Google is paying Apple $1B to remain the default search engine) so I do think that Apple is a very good value at these levels.

AAPL_MWW_chart (1)

Next earnings: April 25th

$MWWShort Monster Worldwide

In many ways, Monster is a company that has struggled to adapt to Web 3.0 and to competition such as LinkedIn (LNKD), Indeed and more targetted offerings such as Dice Holdings. There has been very little innovation and for that reason, the stock has underperformed. It is unfortunately coming down to levels that will make it more difficult to short but for now, it’s a good option for me. There is obviously very little in common between Apple and Monster but this is a case of trading 2 stocks that are trading at almost identical forward P/E ratios.

AAPL_MWW_chart (2)

Next earnings: Feb 11th

Disclaimer: Long Apple (AAPL) and I will be opening this trade on today’s opening.

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