Post a CommentThe year is young but stock picks have done well so far. I can’t complain about a lack of volatility on these names can I? My one losing trade is the stock that I believe the most in (AAPL) so hopefully that turns around.
As will be the case all year, my long & short stock picks will be available to see in my live spreadsheet:
http://www.intelligentspeculator.net/livetrades
You can see the numbers for both companies here:
| Ticker | Name | Price | PE Ratio | PE Next Year | Sales Growth | Analyst rating | Book Value | Beta | Revenue/Share | Sales 5Y Avg Growth | EPS 5Y Avg Growth |
|---|---|---|---|---|---|---|---|---|---|---|---|
| P | Pandora Media Inc | 34.34 | N/A | 69.76 | 132.52 | 3.72 | 2.62 | 1.58 | 3.54 | N/A | N/A |
| LNKD | LinkedIn Corp | 209.59 | 971.52 | 80.12 | 57.21 | 4.05 | 25.83 | 1.05 | 13.45 | N/A | N/A |
As you can see, both of these companies are seeing decelerating growth which is never a good sign. I’d bet that LNKD will have a softer landing though in terms of revenues but also better margins for the foreseeable future.
LNKD Revenue (Quarterly YoY Growth) data by YCharts
Long LinkedIn (LNKD)
LinkedIn released disappointing results last week for most on a number of fronts. I continue to be a strong believer and actually see the decline as a buying opportunity. The fact remains that while the company isn’t as exciting as other social plays, it does run without any significant competition and has been able to not only build a strong brand but also increase relationships and business with companies all around the world. It also relies less on advertising than companies like Facebook or Twitter which means less upfront growth (not as directly correlated to usage) but will end up being more valuable in my opinion as those corporate services will provide nice recurring revenues.
Next earnings release: May 2nd 2014
Short Pandora (P)
I continue to believe that the distribution of music is an extremely difficult sector to make money out of. The competition is extremely fierce and while Pandora is a strong player, it faces competition not only from smaller players like Spotify but also from the big players that actually run ecosystems such as Apple (AAPL), Amazon (AMZN) and Google (GOOG). those players are willing to make very little profits on selling a comparable service, can leverage their network effect, already have a lot of knowledge about their users, etc. I have trouble seeing Pandora dominate the market. It will be unable to gain that much leverage with recording companies or even artists so margins will remain fairly low. It’s one big play is trying to become the “Netflix” of music but the odds are slim so I don’t think its current valuation makes much sense.
Next earnings release: No date yet
Disclaimer: No positions on LinkedIn (LNKD) or Pandora (P) but I will initiate the trade on the open today
