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

By: ispeculatornew
Date posted: 01.27.2016 (3:00 am) | Write a Comment  (0 Comments)

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Today marks the first long & short trade of the year and this one will not come as a surprise to regular readers. To start off, all of my long & short trades are always available (for 2016 but also past years) here:

http://www.intelligentspeculator.net/livetrades

This week, I had more issues finding the ideal trade partially because most if not all of my names are reporting earnings in the next 2-3 weeks. That being said, I’m confident that the potential upside/downside ratio on this trade is very good and that this will be a good start to my 2016 trading.

First off, here are the numbers for both names:

data

And here is the growth in revenues for both in the past few quarters:

NILE_TRIP_chart

Another interesting thing I found is when I looked at search interest from Google trends for both brands. First off let’s compare both:

TRIPNILE

Ah, normal I guess right? One generates so much more interest and completely dominates its niche. So let’s take a closer look at NILE by itself:

NILE

Ouch.. so not only is sales growth weak for NILE but visitors are searching for it less over time? Not a good sign to be sure.

$TRIPLong TripAdvisor (TRIP)

TripAdvisor is one of the 3 tech names that I hold in more significant size (with AAPL and FB) so it’s not a big surprise to see it as my earliest picks to start the year. The stock has had its fare of tough days and even financials have not been growing as quickly as I was hoping for but I do till strongly believe in the brand and think it has continues to increase its lead over all challengers. The fact that it signed Mariott and Priceline among partners for its instant booking initiative also speaks volumes. I do think TRIP is a long term hold and I can’t imagine it justifying an identical valuation (in terms of forward P/E) to NILE.

Next earnings: Feb 11th

NILE_TRIP_chart (1)

$NILE

Short Blue Nile (NILE)

Blue Nile has probably been the stock I’ve shorted the most since writing on this blog. Why? It has consistently been priced too high if you take into account its past, current and future expected growth. NILE has been able to escape competing (for the most part) with Amazon but does remain in a very tricky space with very little growth, a difficult market to target and customers that for the most part are one time buyers. I simply do not see how NILE can justify the same valuation as TRIP.

Next earnings: Feb 9th

NILE_TRIP_chart (2)

Disclaimer: Long Tripadvisor (TRIP)

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