IntelligentSpeculator’s 2013 Tech Stock Power Rankings

By: ispeculatornew
Date posted: 01.10.2013 (3:00 am) | Write a Comment  (0 Comments)

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I’m a bit exhausted but happy. This is by far the longest and most difficult post I write but after much research, I’m ready to hit the publish button:) I start off by looking at the stocks that I follow and try to rank them as much as possible!

Let me start off by saying, I will be making mistakes here, obviously. The goal is not for all of my top picks to do well or all of my bad picks to do poorly. Rather, I hope that my top 10 picks can end up doing better than the bottom 10. Does that make sense? Hopefully by a fair margin but I’m not even asking for that much to be happy.

How I Rank Them?

Two main things I looked at are:

-How undervalued/overvalued are these stocks in my opinion?
-How confident am I in that prediction?
-What are the upsides and downsides to each stock? 

Some Companies Were Excluded

I decided to exclude the same companies as last year mostly so: Chinese stocks (SNDA, SOHU, NTES, CTRP, YOKU), Yandex (YNDX) and MakeMyTrip (MMYT) for the same reason and Orbitz Worldwide (OWW) because the stocks trades under $5. I also removed 2 stocks that I now struggle to value:

Research in Motion (RIMM) and Groupon (GRPN)

I did add 2 new stocks: Facebook (FB) and Trulia (TRLA)

I don’t expect a single person to agree with the entire list, the chances of that happening would be nearly 0. I would still love to get your comments.

Without further wait:

2013 IntelligentSpeculator Technology Stock Power Rankings

Stock/Company Comments
1 Apple (AAPL) Once again, Apple sits at the very top of my rankings. I know
that there has been a lot of negativity about the company formerly led by Steve
Jobs but I continue to think that the upside is significant while the downside
isn’t. That screams opportunity to me. The P/E ratio remains low for a company
that continues to grow at a decent speed.
Would I still say you’d be crazy not
to own Apple? Absolutely
.Key Numbers: P/E: 11.9, Forward P/E: 9.13, 1Y Sales Growth: 44.58
2 Baidu (BIDU) Baidu was near the top of my rankings last year and it did not
do as well as I would have hoped but it remains solid. Yes, growth in China has
slowed down significantly but BIDU remains the dominant player in the exploding Chinese market
and I just don’t think it’s valuation reflects that.Key Numbers: P/E: 22.74, Forward P/E: 16.86, 1Y Sales Growth: 83.2
3 Google (GOOG) Google is certainly formidable and
I like what I see out of the
Larry Page led search engine
. There are certainly many challenges but I do think
that it is clearly more than a one trick company and seeing Android take over
the mobile space is clearly a long term positive.Key Numbers: P/E: 22.26, Forward P/E: 15.74, 1Y Sales Growth: 29.28
4 Facebook (FB) I’m obviously a huge believer in Facebook, in its future (not
because of display ads) as you can see in my
recent post about the social web
. The stock is up over 50% since my purchase but I do believe it can
go much higher.Key Numbers: P/E: 63.18, Forward P/E: 44.3, 1Y Sales Growth: 87.99
5 Amazon (AMZN) Amazon is incredibly challenging to value because its margins
are so low. Using a P/E ratio is nearly impossible. That being said,
continues to expand its business, its customer base, etc. I’m a big believer
over the long term
although it’s always difficult to know what could happen over
1 year. The upside is too important though for me to not have Amazon near the
very top of my listKey Numbers: P/E: 502.6, Forward P/E: 75.46, 1Y Sales Growth: 40.56
6 LinkedIn Corp (LNKD) LinkedIn continues to be priced beyond what most of us would say
is reasonable but its business is terrific, is experiencing high growth and I
still think it can expand to many other areas as I wrote about.Key Numbers: P/E: 741.13, Forward P/E: 86.85, 1Y Sales Growth: 114.81
7 eBay Inc (EBAY) I continue to believe that eBay’s Paypal business is terrific,
and while there is a lot of competition, nothing seems to threaten Paypal’s
dominance at this point.Key Numbers: P/E: 25.82, Forward P/E: 19.09, 1Y Sales Growth: 27.25
8 TripAdvisor (TRIP) In terms of building long term businesses,

TripAdvisor is on the right path
and I still think its priority will be
around building the community and its brand rather than profitability. There are
many different directions where the company can go next beyond simple display
and lead advertising and I expect a lot more from TRIP in the coming years.Key Numbers: P/E: 34.13, Forward P/E: 24.46, 1Y Sales Growth: 31.45
9 Priceline (PCLN) What a terrific company. Priceline has delivered and surprised
for years now and remains a very solid play on internet travel. Its brand is
very strong and I do think that while growth is capped, the market still
underestimates the numbers that Priceline can come up with.Key Numbers: P/E: 24.82, Forward P/E: 17.46, 1Y Sales Growth: 41.19
10 Yahoo (YHOO) Quite simply: Marissa Mayer.

She is transforming the company culture rather quickly and this is also about
the downside being fairly limited on Yahoo
given all of its assets. I’m
curious to see if she can keep expenses under control given all of the changes
but I do think she has a chance of turning things around.Key Numbers: P/E: 17.87, Forward P/E: 17.08, 1Y Sales Growth: -21.19
11 OpenTable Inc (OPEN) Open Table continues to be a bit of a challenge for me to value
but my pain point is that even though growth has slowed, it remains fairly high
and I do think there is still a lot of potential for OPEN to do well.Key Numbers: P/E: 51.36, Forward P/E: 26.71, 1Y Sales Growth: 40.94
12 Dice Holdings (DHX) For a long time, I’ve thought Dice Holdings was massively
undervalued compared to Monster Worldwide (MWW) and I did several trades between
the two. I don’t think it’s as clear now but DHX remains a good value.Key Numbers: P/E: 15.8, Forward P/E: 14.82, 1Y Sales Growth: 38.86
13 Rackspace Hosting Inc
Rack Space has a terrific business, in an exploding space (cloud
computing). The bigger problem is that margins remain low but I would think
those could increase over time.Key Numbers: P/E: 106.19, Forward P/E: 70.03, 1Y Sales Growth: 31.33
14 ValueClick Inc (VCLK) I’ve been surprised by how strong Valueclick’s business has been
, especially in terms of revenues. Earnings have not increased as much though.Key Numbers: P/E: 17.05, Forward P/E: 10.78, 1Y Sales Growth: 30.03
15 Microsoft Corp (MSFT) Microsoft continues to face competition in its O/S and Office
businesses from cloud based alternatives but it remains a solid player and is
moving as quickly as it can to adapt. Will it be quick enough? Remains to be
seen.Key Numbers: P/E: 10.25, Forward P/E: 8.28, 1Y Sales Growth: 5.4
16 Zynga (ZNGA)
Zynga is probably the most argued point from
my social web stock article on SeekingAlpha
. The fact is that while it has a lot of cash (and probably not much
downside), I still think that the fact that its games are losing players and its
been forced to shut down a lot of activities is a major factor in my decision to
have Zynga in the lower half of my listKey Numbers: P/E: N/A, Forward P/E: 208.19, 1Y Sales Growth: 90.82
17 Demand Media (DMD) Demand Media seems to have recovered to some extent but I still
fail to see how it will be able to display strong growth in the coming years.Key Numbers: P/E: N/A, Forward P/E: 19.6, 1Y Sales Growth: 28.44
18 Expedia Inc (EXPE) Expedia had very strong numbers last year and continues to do
well despite spinning out a very valuable property and partner (TripAdvisor), I
do expect growth to remain fairly strong in 2013.Key Numbers: P/E: 25, Forward P/E: 17.85, 1Y Sales Growth: 13.69
19 IAC InteractiveCorp
IAC Interactive has certainly been performing much better than I
expected, I will be very impressed if they can keep up this level of growth.Key Numbers: P/E: 22.84, Forward P/E: 12.75, 1Y Sales Growth: 25.82
20 Rosetta Stone Inc (RST) Rosetta Stone is another company that I like as a consumer but
could not imagine myself investing in. It had nice gains last year but continues
to show flat growth in revenues despite huge marketing expenses. It does expect
2013 to be its first profitable year but that remains to be seen. The P/E ratio
looks very expensive to me.Key Numbers: P/E: N/A, Forward P/E: 54.24, 1Y Sales Growth: 3.7
21 Monster Worldwide
Monster Worldwide is one stock that I’ve believer to be
overvalued for a long time. It is now about 40% down from its 52 week high now
though and I’m starting to feel like shorting MWW is not as great of an idea.
That being said, I certainly wouldn’t own it either.Key Numbers: P/E: 20.75, Forward P/E: 12.74, 1Y Sales Growth: 13.78
22 XO Group Inc (XOXO) The company formerly known as The KNOT continues to evolve but
it does not expect to make much more this year than it did the last. I still
don’t see much to get excited about here.Key Numbers: P/E: 27.32, Forward P/E: 17.36, 1Y Sales Growth: 10.08
23 Netflix (NFLX) Huge gamble and I’d be scared to short the stock but it’s P/E
ratio remains very high. Its recent deal with Disney is very encouraging but I
still expect the competition that Netflix faces to make it difficult to become
much more profitable.Key Numbers: P/E: 109.16, Forward P/E: 98.84, 1Y Sales Growth: 48.18
24 Adobe Systems Inc
The fact is that Adobe’s core business has not been strong in
some time and both revenues and profits are expected to decline this year. It’s
still a stok I’m staying far away from.Key Numbers: P/E: 23.27, Forward P/E: 21.41, 1Y Sales Growth: 4.45
25 Travelzoo (TZOO) Travelzoo was truly disappointing last year and a big part of
that was the quickly shrinking margins in its deals business, as competition
continues to grow.Key Numbers: P/E: 15.14, Forward P/E: 16.07, 1Y Sales Growth: 31.53
26 AOL Inc (AOL) AOL was a big part of my failures last year, thanks largely to
its patent sale. I obviously don’t expect another such event to occur this year
and with revenues to remain flat, I’m ready to take my chances on AOL, once
again!Key Numbers: P/E: 6.67, Forward P/E: 16.28, 1Y Sales Growth: -8.88
27 WebMD Health (WBMD) WebMD does not have very good fundamentals if we’re being
honest. Nothing justifies that P/E except for the constant takeover rumors. I’m
betting that it won’t happen and the company will continue to suffer from a slow
advertising market.Key Numbers: P/E: N/A, Forward P/E: 148.02, 1Y Sales Growth: 4.54
28 Quin Street Inc (QNST) Quinstreet spent a lot of money acquiring businesses and setting
up a business. A big problem though is that it has a lot less to spend so
getting much growth out of its portfolio will be a challenge.Key Numbers: P/E: 37.06, Forward P/E: 8.42, 1Y Sales Growth: -8.08
29 Zillow Inc (Z) I have some serious doubts about how both Zillow and Trulia will
end up making money, in what is still a slow housing market. The valuations are
out of whack in my opinion.Key Numbers: P/E: 152.95, Forward P/E: 69.52, 1Y Sales Growth: 116.8
30 Trulia (TRLA) Same opinion as I have about Zillow, only worse!Key Numbers: P/E: N/A, Forward P/E: 113.69, 1Y Sales Growth: 94.68
31 Pandora Media Inc (P) I’m not a big believer in making money through music, I’ve said
it before and the rumors/announcement that Apple would launch a competing
service in the next few months should be enough to scare any existing Pandora
shareholder. That and competition from Spotify, Amazon and others will continue
to delay profitability.Key Numbers: P/E: N/A, Forward P/E: N/A, 1Y Sales Growth: 99.14
32 Blue Nile Inc (NILE) No surprise and many of you probably think I am a Blue Nile
hater. I’m not, I’ve used the company in the past and loved my experience.
However, it remains overvalued time after time.Key Numbers: P/E: 66.36, Forward P/E: 33.39, 1Y Sales Growth: 4.54

Disclaimer: Long Facebook (FB), Long Apple (AAPL), Short Blue Nile (NILE)

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