New trade: Long CTrip (CTRP) & Short Valueclick (VCLK)

By: ispeculatornew
Date posted: 01.07.2011 (6:30 am) | Write a Comment  (5 Comments)

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The streak continues! In fact it is coming to an end! We have already published four technology stock picks this week and this one will be the last until one of them is closed out! It usually does not take too long but I will certainly keep you posted on the progress! If you have followed this very busy week on IntelligentSpeculator, you can probably guess what company I am going long in this post. Of course if I am selecting CTrip as one of my four stock picks for 2011, it will be one of my picks here as well. Logic right?

Before getting started, here are the main numbers that I used to decide on this trade:

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Trend Analysis

It’s a no march in terms of trend analysis as Ctrip (CTRP) crushes Valueclick (VCLK) which had a good run but has slowed down quite a bit

Long CTrip (CTRP)

CTrip is one of the leading internet travel companies and the leader in the Chinese market which is booming. You will not be surprised to read that Ctrip’s revenues and profits have been increasing very quickly. The company has a great spot in an emerging business in China but still has its challenges, especially in dealing with Chinese airlines and other partner companies. If you look at their chart, you will see a major drop last July when there were problems while negotiating rates and those could certainly occur at some point in 2011. However, the fact remains that the growth is too solid to pass by, especially for a stock currently trading at a reasonable P/E.

Short Valueclick (VCLK)

As I was writing about CTrip, it was difficult to focus on the Chinese company and all of its growth without remembering how little excitement there is for Valueclick. The company has been struggling to find any growth and it’s not surprising when you look at how they are doing. Their technology has been lagging other companies such as Yahoo, Google and Microsoft and they own few properties to offer to their advertisers. They do have an impressive network of partner websites but given their problems in other areas, Valueclick is having trouble offering competitive payouts to those partners. The result? Lesser quality websites, less satisfied advertisers, etc. It’s a fairly simply but sad cycle for Valueclick shareholders and I do not see any indications of a turnaround right now. This stock has little growth in it and makes for a perfect short.

Just take a look at the charts for both companies:

Disclosure: I do not hold positions on either stocks

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5 Comments

  1. Comment by Jessica07 — January 7, 2011 @ 1:39 pm

    Wow. VCLK’s chart is extremely impressive! Thanks for sharing.

  2. Comment by IS — January 8, 2011 @ 8:46 am

    @Jessica07 – You are more than welcome:)

  3. Comment by Remus — February 17, 2011 @ 10:20 am

    IS any thoughts on Valueclick after their earnings?
    Quite a big jump in this.
    KNOT you saw was still soft retreating after its gains but this one I am not sure…
    your thoughts would be much appreciated.

    thanks,
    remus

  4. […] Google(GOOG) – Priceline (PCLN) – CTrip (CTRP) – Amazon […]

  5. Comment by IS — March 8, 2011 @ 5:37 am

    @Remus – Sorry for the delay, was under the impression I had answered… Overall I was a little impressed with the performance but it does remain a stock I would short more than go long on. Compared to competitors, it is growing more slowly and it’s strategy is not as clear.

    The big issue with shorting VCLK is the always existing possibility that it could get purchased.

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