valuation concerns. Each of these names trades at substantial premiums to book
values and cash flows, and now maybe the time to exit positions from the long
side and lock-in profits.
While it is always heartbreaking to sell a stock before a major run-up, it is
better to “sell too soon” than it is to wait until it is too late to catch a
decent bid for your portfolio dogs when valuation and growth rates make the name
a sell from a fundamental standpoint.
Qlik Technologies Inc. (QLIK): The company is a major
player in the technology world, but we think heady web valuations have spilled
over to the cloud-computing industry. We would look to sell or possibly short
QLIK provided that the overall stock market breaks lower. In the face of a
rising stock market, shorting seemingly overvalued stocks can lead to financial
misery, so make sure to set tight stop-loss orders.
Even with more losing trades than winning trades, investors who set hard
stop-loss orders profit because their winners, although few, make up for many
small losing trades. In the end, this type of trading strategy works pretty well
on the short side when married with strong technical analysis. While QLIK looks
okay from a technical perspective, the fundamentals are questionable when
compared to the company’s market valuation which makes this stock a potential
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