Some of our biggest stories and best trades last year include:
Telling people to short/sell SIGA at $14
Telling people to short/sell OPEN at $110
Telling people to short/sell NFLX at $300
Telling people to short/sell TZOO at $100
Here is our recommedation to buy GOOG and AAPL last April!
Published April 25, 20011 at Seekingalpha.com:
Sometimes, a high growth stock becomes priced for perfection and beyond. Other times, a fast growing company ends up trading at an undervalued price relative to future cash flows and growth prospects. The following seven companies have grown at an incredible pace over the past ten years, but as earnings growth has slowed given the sheer size of these businesses or changes in the technology that drives their industries, so has the rise in price in each of the following names. Investors wishing to place small “starter” positions in these stocks should consider selling leap put options instead of purchasing the shares directly as a way to buy them at cheaper prices while earning a nice rate of return per unit of risk while you wait. Selling put options is an interesting way to “get long” a given stock.
AAPL — Apple shares recently got a small bounce after the company released earnings for the most recent quarter that were well ahead of the street at $6.40 per share. Apple shares are now trading at a trailing twelve month PE ratio of 16.7X with a forward multiple of 12.4X earnings. Apple is riding high on the trend toward digitization in the handheld device, music, book and social networking spaces as well as the incredible rise of the internet as a tool for recreation and commerce. Apple shares sell for a PEG ratio (price to earnings-to growth) of only .70X, which would qualify them as a cheap growth stock, or “Garp” investment — ie. Growth at a Reasonable Price so long as the growth is sustainable and can continue for several more years (which is questionable to be certain).
Apple investors could either sell a January 2012 $350 put option or could buy a January 2012 $300 call option and sell front month $350 calls as a hedge (a safer way to play this stock in my view). Apple saw YOY quarterly earnings and revenue growth both exceed 70% — clearly it is getting it right as a company and this stock may be the cheapest relative to historical growth on this list. With that said, at a market cap of well over $300 Billion, investors have to wonder just how much room a company this big has to grow in the future and if the stock represents value, or the top of some sort of consumer gadget bubble. Interestingly enough, Apple found a way to crush Amazon (AMZN) and Barnes and Noble (BKS) with its IPAD Tablet computer, as E Books are now easily read over the Apple device whose technology appears to be much more advanced than its rivals. One thing is certain, Apple is one of the best managed businesses on Earth.
GOOG — Google shares are starting to look cheap after the recent sell off, with shares trading for 19X trailing earnings and for 13.2X forward earnings. GOOG shares fetch a reasonable 11X EV/EBITDA multiple and revenue growth YOY stood at 26% in the past quarter. Google’s search market share continues to grow and the company has a strong opportunity to grow in China provided President Hu allows this eventually, and the company has a good chance to gain significant market share in the greater developing world. Google has a reasonable leverage ratio with nearly four times as much equity as liabilities and the company is generating strong cash flows from operating activities, which should amount to roughly 10% of the company’s market cap fairly soon if the business continues to grow at a 20% or so rate.