New Trade: Long TripAdvisor ($TRIP) & Short Travelzoo ($TZOO)
After publishing my 2013 Tech Stock rankings, I’ve been able to start off the year with three good looking trades so far.. or I had until Apple’s recent collapse. That trade is still flat so I do remain confident although I will continue to read analysis on the recent quarter. There’s no doubt that holding Apple is not as [...]

After publishing my 2013 Tech Stock rankingsI’ve been able to start off the year with three good looking trades so far.. or I had until Apple’s recent collapse. That trade is still flat so I do remain confident although I will continue to read analysis on the recent quarter. There’s no doubt that holding Apple is not as “cool” as it was just a few months ago but don’t think that will scare me off. Last week I mentioned I would be publishing a spreadsheet with my picks, it’s now up there (only my 2013 tech stock picks are there for now) and you can take a look here. More on that in the near future. Let’s start off by publishing the main numbers for both stocks involved in today’s trade!

TickerNamePriceEPSPE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBeta
TZOOTravelzoo Inc22.761.1519.9617.1119.851.913.671.36
TRIPTripAdvisor Inc45.961.3335.0825.099.6431.453.61N/A

Long TripAdvisor (TRIP)

Not a big surprise to regular readers here. I’m a big believer in social web stocks and the fact is that TripAdvisor brings a unique product to the marketplace in my opinion. It has the most trusted review system by far, an active community and what is quickly becoming a trusted relationship with many of its users. That is fueling much stronger growth in revenues and profits and I expect that to continue in the future. Competing with TripAdvisor will turn out to be a very difficult, even for established players such as Google it’s an uphill battle. I do think that TRIP has a lot of upside in both it’s business and  stock price and that both revenues and profits will continue to show strong growth.

TRIP

TRIP Revenue Quarterly YoY Growth Chart

TRIP Revenue Quarterly YoY Growth data by YCharts

Next earnings: February 13th

Short Travelzoo (TZOO)

After making Travelzoo one of my top 4 picks in 2012 for the stock competition, I’m obviously not as optimistic this year.  The fact is that the company’s performance has been very disappointing. Yes, Travelzoo does email deals very well but due to subscriber fatigue and a lot of competition, growth seems to have almost disappeared. That makes it very difficult to warrant a forward P/E of 17.  I’ve read a lot of research about the company and no one seems to believe that growth will resume making it very difficult to believe that there will be a quick turnaround, especially with the amount of competition in the space.

TZOO

TZOO Revenue Quarterly YoY Growth Chart

TZOO Revenue Quarterly YoY Growth data by YCharts

 

Next earnings:  April 19th

Disclaimer: No positions on TRIP or TZOO

 

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