New Trade: Long Tripadvisor ($TRIP) & Short Blue Nile ($NILE)

By: ispeculatornew
Date posted: 01.09.2015 (3:00 am) | Write a Comment  (0 Comments)

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Wow… So on Monday I opened my first long & short trade of the year. I mentioned in that post that I was shorting AOL despite having a hard time reading the company in recent years mostly because those takeover rumours seemed blown over. Then, the next day, news comes out that Verizon (VZ) has/is considering taking over AOL. Then yesterday activist investor Starboard asks Yahoo to more seriously consider buying AOL. Are you kidding me? Ah well. Win some and lose some but this is not the start I was looking for obviously. That trade is down almost 10% which is certainly bad news but I guess given all the news and speculation, it could have been worse. Oh well, here I am with a second trade. I certainly aim on doing well over a larger set of trades as has happened in the past few years.

You can also see my long & short trades here:

Today,  I’m opening my second trade and am once again shorting a stock that I’ve liked to bet against over the years. I’ve had a lot more success shorting this one though. Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg GrowthSales 5Y Avg GrowthEPS 5Y Avg Growth
NILEBlue Nile Inc35.1144.5131.31-3.5812.493.910.730.7435.899.751.360.65N/A
TRIPTripAdvisor Inc73.2648.8927.69-5.1223.813.527.61.576.6129.99N/A14.2N/A

Here is a chart that I always like considering, especially for 2 stocks that are trading at very comparable P/E ratios:

ycharts_chart (3)

$TRIPLong Tripadvisor (TRIP)

I’ve done extremely well with my high conviction long term speculative picks but last year’s only bet, on TripAdvisor, has not paid off so far. I paid fairly close to TRIP’s high and the recently difficult market conditions have had a big impact on TRIP. That being said, I’m very much considering adding to that position. I have a tremendous level of confidence in TRIP because in my opinion it is the clear leader in a very important market. Yes, other players may have bigger revenues but TRIP has the traffic, the community and the brand that will help it outperform in the long term. I have no doubt that revenues will continue to climb and perhaps even accelerate which makes it a good buy at these levels. That being said, the stock had a very tough earnings report and call a few months ago and I’ll certainly pay close attention to what they come out with a month from now.

ycharts_chart (1)


Next earnings release: February 11th 2015

$NILEShort Blue Nile (NILE)

Blue Nile is a great company that I actually like and have used. That does not however make it a good investment and when I look at the growth in revenues and earnings, they still do not justify what I’m seeing out of NILE. A few years ago that was even more obvious but I still feel confident in saying that the upside vs. downside involved in shorting Blue Nile is very good. Just look at the difference in growth between the two companies and consider that they are trading at very comparable forward P/E ratios.

ycharts_chart (2)

Next earnings release: February 6th 2015

Disclaimer: Long Tripadvisor (TRIP)

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