New Trade: Long Priceline ($PCLN) and Short AOL inc ($AOL)

By: ispeculatornew
Date posted: 01.21.2013 (3:00 am) | Write a Comment  (1 Comment)

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After publishing my 2013 Tech Stock rankingsI’ve been able to start off the year with two good looking trades so far. I remain a bit late on publishing all of my trade info but I am working on an online spreadsheet where I will keep my live trades and positions, which will help you see how I’m doing live;) More on that very soon! Today, I’m opening a trade on a stock that haunted me last year. If you’re a regular reader, you’ll know exactly what I mean, if not, keep reading please;) Let’s start off by publishing the main numbers for both of these stocks!

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Long Priceline (PCLN)

I was not as active on Priceline but it wasn’t because I didn’t like the stock or the company. In fact, it’s quite the contrary. But Priceline has been one of the best performers in the past 10 years and last year I often felt like other stocks had more upside. Today’s trade is a bit different though. I cannot imagine how both of these stocks could be priced at comparable P/E ratios. Honestly, Priceline is one of the most solid and consistent performers among the stocks that I follow. The company’s fundamentals are very solid, growth in all areas remains very solid and I just think the downside risk is very limited. Priceline has an incredibly strong brand, a loyal customer base and continues to expand thanks to smart moves such as its recent acquisition of Kayak (KYAK) which was clearly a need that the travel giant needed to focus on. In the end, attractive valuation for a stock that is trading at a very reasonable multiple.

PCLN

Short AOL inc. (AOL)

As one reader recently wrote, I had a fairly good year if you exclude my trades on AOL.. that works apart from the fact that once you start excluding things, returns become meaningless. The fact is that I beat heavily against AOL last year and it hurt me. The biggest reason was the huge patents sale that it made which had not been anticipated by the markets. That was the biggest reason behind AOL’s spectacular return. Otherwise, revenues continues to decrease and it’s unclear how the company will be able to offset revenue losses from its shrinking ISP business. My ultimate fear is to keep dropping because of AOL as happened last year but hopefully I’m seeing things straight now and AOL does not have any surprise assets to sell off;)

AOL

Disclaimer: No positions on PCLN or AOL

 

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1 Comment

  1. Comment by Martin — January 21, 2013 @ 7:42 pm

    Looks like AOL was great thru 2012 compared to Priceline. However I no longer invest in companies which do not pay dividends (excluding AOL’s special dividend in December).

    You have a great looking blog and overall it inspired me to work on my own blog.

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