Post a CommentA lot more earnings came in this week. The big one was Twitter (TWTR) of course which I had explained I was considering buying. Even that day, not only did I have no idea what would happen but even less what I “wanted” to happen:
Still thinking about buying $TWTR so not sure what I'm hoping for tonight? BadEarnings = Good Entry Point? Depends why I guess
— IntelligentSpec (@intelligentspec) July 29, 2014
In the end, Twitter shot up after very strong numbers. I’ll write more about this without a doubt:) Am I still a potential buyer? Time will tell… That being said, I’m still a believer in Twitter so it remains a possibility:) Back to my long & short picks, it was a fairly quiet week despite markets being crushed. My portfolio’s return remains in the +30% range so I’m not complaining.
You can also see my long & short trades here:
http://www.intelligentspeculator.net/livetrades
Today, I’m making my 20th long & short stock pick of the year!! It’s between 2 players that dominate their “sector”. The big difference though is that one player is in an industry that is fairly mature and makes decent profits while the other isn’t quite as convincing. You’d think Pandora was growing a lot faster than PCLN and it is.. but the difference is shrinking rather quickly don’t you think? Here are the numbers:
| Ticker | Name | Price | PE Ratio | PE Next Year | Return YTD | Sales Growth | Analyst rating | Book Value | Beta | Revenue/Share | Sales 5Y Avg Growth | EPS 5Y Avg Growth |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| PCLN | Priceline Group Inc/The | 1245.9 | 32.89 | 19.43 | 7.18 | 29.13 | 4.68 | 137.97 | 1.26 | 133.4 | 28.95 | 37.44 |
| P | Pandora Media Inc | 24.54 | N/A | 47.84 | -7.74 | 132.52 | 4.09 | 2.51 | 1.82 | 3.54 | N/A | N/A |
PCLN Revenue (Quarterly YoY Growth) data by YCharts
Long Priceline (PCLN)
Priceline has been a stock star for a decade now and when you look at its chart, you can see how much of a value it is. I do think Priceline will continue to face competition but has such a strong brand that it will continue to display steady growth and is a good pick at these levels.
Next earnings release: August 11th 2014
Short Pandora (P)
It’s not a secret, I think Pandora is in a very tough spot. It has a great business, a great product but faces massive competition from the likes of Google (GOOG), Amazon (AMZN), Apple (AAPL), Spotify, etc. Many of those players are willing to operate at a loss for the medium to long term as a way to keep customers in their ecosystem. As those ecosystems expand to connected homes and smart cars, it’ll be an increasingly challenging environment. Margins will remain very small for Pandora and I just don’t think it can currently justify its valuation. If it can reach Netflix style of size, that might work out well but I’d say it’s unlikely at the moment and thus Pandora looks very expensive at these levels.
Next earnings release: October 24th 2014
Disclaimer: No positions on Priceline (PCLN) or Pandora (P)
Please consider Long TWTR/Short ANGI
Interesting idea, I have to take a new look at TWTR given its most recent earnings and don’t know much about ANGI, any thoughts on it?
Angie’s List is a service similar to YELP except that they charge a membership fee. Personally, I like the company and have had good experiences using it. However, it seems nobody in this Internet age wants to pay for anything like membership, so the company is probably doomed. Here’s a good article analyzing the company:
http://seekingalpha.com/article/2375885-angies-list-the-end-may-be-nigh
@ Ken – Thank you, I’ve been reading up and might add ANGI to my radar.. always find it difficult to trade a company that is in rapid decline because so many other factors (value of actual assets, takeover possibilities, etc) come into play, as is also the case with BBRY. But you never know, might change. Thanks for pointing this out to me!