After publishing my 2013 Tech Stock rankings, I’ve been able to start off the year with a few good trades. 3 out of my first 4 are profitable so far and one is above my 20% threshold which means I might close it at any point but for now, I do think there might be room for a bit more profits. You can see live performance of those picks here:
Today, I wanted to go long LinkedIn, despite the fact that it announces earnings this week, something I tend to stay away from. I looked at different alternatives and was looking for other high P/E trading stocks so Yelp ended up being a good candidate but in the end, given the explosion in “local”, I preferred going for a “safer” short. Here are the numbers for those 2 trades:
Long LinkedIn (LNKD)
Ticker Name Price EPS PE Ratio PE Next Year Sales Growth Analyst rating Book Value Z Zillow Inc 37 0.05 180.19 80.51 116.8 3.91 8.27 LNKD LinkedIn Corp 123.82 0.15 825.27 94.14 114.81 4.07 7.74
LinkedIn nearly ranked at the top of my 2013 social web stocks rankings but being #2 to Facebook (FB), especially when you know how bullish I am of the Mark Zuckerberg-led company. The fact is that LinkedIn is in many ways a unique company that could go in many different directions in the next few years with very little competition. Yes, LinkedIn trades at an incredibly high P/E which creates challenges but I feel a lot better trading it against other high P/E names as I am doing today.
Next earnings: February 7thShort Zillow (Z)
I wrote about both Zillow (Z) and Trulia (TRLA) last October and had not been very impressed by either company. That has not changed and I simply don’t see how in the world this stock can trade at such a P/E. Earnings will not explode and there is no reason in my opinion for the stock to trade at such high prices. Yes, revenues have increased at a solid pace but that growth is slowing down and earnings have not tracked.
Next earnings: February 13th
Disclaimer: No positions on LNKD or Z