Vetr Blog

Crowdsourced price predictions for the stock market.

LinkedIn: Priced to Perfection?

For some folks above a certain age, social media can be a bit of a riddle. It’s not that the technology itself is especially difficult to master –apps are usually very easy to operate – but that there isn’t always an immediate answer to the question “why?”

LinkedIn ($LNKD), though, is one of the exceptions. Almost unique among social networks, LinkedIn’s value is immediately clear to even the least-adept social networking Luddite. The company has become enormously successful by essentially creating a web interface around the age-old concept that everyone is connected to one another at some level though their mutual contacts. Brilliant.

The company was one of the first of the mega-social sites to IPO, coming public at $93 in May 2011, and it rose fairly steadily over the next two years. But it’s been a wild ride since then; the stock cratered from its high of around $250 in September 2013 to a low last May of $150, and has surged back up to its current quote around $232.

Despite the volatility, Wall Street remains unabashedly bullish on $LNKD. According to Thomson/First Call, A total of sell-side 36 analysts follow the stock, of which 28 are buys, 10 are holds, and zero are sells.

In contrast, Vetr.com users – generally a pretty tech-savvy bunch – are essentially split on the company. $LNKD earns only three stars on our platform, which translates to a “hold”. Of 15 active ratings, eight are bullish and seven are bearish. Interestingly, however, even our bulls are not that excited; the average 6-month target price for the stock is $235, a mere 1.17% upside from today’s closing quote.

Bulls on the stock cite LinkedIn’s rapid growth, low valuation in comparison to quasi-competitors Facebook ($FB) and Twitter ($TWTR), and high recurring revenue from the company’s software-as-a-service business model. Bears, on the other hand, note that growth is not translating to the bottom line, the stock is priced to perfection, and insiders are selling. In either case, the company has a dominant position in one of the best real-life applications of social networking. The question, as usual, is whether the stock’s price already reflects it.

Where do you think LinkedIn’s price will be six months from now? Make a rating!

Alibaba: A Good Entry Point Ahead of Earnings?

In the few short months since its record-setting $25 billion IPO, Alibaba Holdings ($BABA) has become very popular among U.S. investors. It is already the fifth most widely-held stock in TD Ameritrade client portfolios, no mean feat given $BABA is a Chinese company relatively unknown in the U.S. outside Wall Street.

The stock’s popularity is for good reason. Alibaba is the largest online commerce company in the world, with hundreds of millions of users interacting with millions of merchants every day. As with most things Chinese, the scale is massive and hard to understate; transaction volume on$BABA’s sites reached $295 billion in sales in 2014, more than eBay ($EBAY) and Amazon ($AMZN) combined. Sales growth, as you’d expect, is very robust; revenue in the third quarter climbed 54% year-over year. And to think online shopping penetration in China is still less than 50%…

The stock has rapidly become a darling among Vetr.com users as well. It earns four stars, with 50 active ratings on $BABA on the platform. Of these, 42 are buys, three are holds and five are sells. For its part, the Wall Street establishment is even more bullish on $BABA than our users are, with 32 buys, three holds and zero sells (undoubtedly a function of that IPO we mentioned earlier).Vetr.com users have an average 6-month price target of $124, some 24% higher than the stock’s current levels of $99.58. Fundamentally, though, the stock is anything but cheap…but then again, rapid growth never is.

Alibaba reports quarterly earnings on Friday, February 13. The market is looking for revenue of $4.45 billion and earnings per share of $0.75 per share, and all eyes will be on the company’s user metrics. Meanwhile, $BABA is aggressively going after China’s 600 million mobile phone users and using some of its IPO windfall to invest heavily into such areas as payment platforms, digital media and financial services. Despite the outlook, $BABA has fallen off from its post-IPO surge, dropping from $120 per share back in November and breaching the psychologically key $100 mark during an admittedly weak few days of trading in New York.

What’s your take on $BABA? Will the earnings release in a few weeks propel this stock higher, or does the current price already reflect Alibaba’s fantastic growth? Make a rating!

The Five Most Bullish Popular Stocks on Vetr

Which stocks do people think will go up in 2015? It’s easy to name stocks your gut tells you will rise, but as we know your gut may not always be in-line with the crowd. A great personal example is a taco place near my home that I love, but it only has 3-stars on Yelp. Go figure. We dug in to popular stocks on Vetr to find out which ones people were collectively most bullish on, giving them all 5 stars.

1)      El Pollo Loco Holdings Inc. $LOCO

100% of the ratings for $LOCO are bullish. Maybe the popularity of Gustavo Fring has brought light to Pollo. Regardless, the Vetr community feels the stock is going to go up over 60% as early as April.

2)      Wayfair Inc. $W

Wayfair is also a stock that people are bullish about on Vetr. The community is predicting the stock to go up to close to $40 over the next 3 months. It seems that college kids may finally be getting tired of Ikea furniture.

3)      Vivint Solar Inc. $VSLR

With gas prices plummeting, you would think people would be bearish on solar firms. Based on the sentiment of the Vetr community, it doesn’t look like cheap gas is going to last very long. They’ve suggested that Vivint will be more than doubling in value over the next 6 months.

4)      Canadian Solar Inc. $CSIQ

Another alternative energy stock, Canadian Solar, is a popular stock with Vetr users. $100% of the ratings for Canadian Solar are bullish, highlighting the strong sentiment towards solar companies and Canada.

5)      Foresight Energy LP $FELP

Not solar, but yet another energy firm gaining popularity on Vetr. Recently coal has taken a backseat to oil, but not with the Vetr community. This is likely a reflection of an increase in naughty children’s stocking stuffers for the 2014 holiday season.

Energy stocks being in the top 5 isn’t a huge stretch, but I’m sure most readers weren’t considering a chicken restaurant and an online furniture store being the top popular bullish stocks of the investment community. I’m sure there will be plenty of new ideas and conclusions arising from Vetr ratings in the coming months.

By

JD Singh – SVP of Business Development

Should Investors Sell Wal-Mart’s Recent Rally?

The holiday season is when the retailing sector is put under a microscope and analysts of all shapes and sizes try to discern strategic trends from a few weeks of frenetic activity. Since consumer spending accounts for such a large portion of U.S. economic activity, this makes sense; as goes the consumer, so goes the economy. And few companies symbolize retailing better than Wal-Mart Stores ($WMT).

The good news for Wal-Mart is that a variety of macro elements have aligned to create one of the best foundations for retailers in several years. U.S. economic growth finally edged out of its moribund post-crisis funk, payroll gains have been solid, and few sectors are more leveraged to falling oil prices than discount retailing.

For a company like Wal-Mart, which sells everything and is everywhere, the operating environment heading into 2015 is one of the best in years. Unsurprisingly, the stock has performed well since the break in oil prices, rising just under 11% year-to-date, but a whopping 17% since October 16th. It displayed significant relative strength during both the hiccup in early October and the correction in December, and made a technical breakout from a two-year price channel in the process. Due to its massive size and membership in many popular market indices,$WMT has both an effect on, and is a participant in, broader market trends, meaning the stock’s strength this quarter has been a major factor in pushing the market to record levels.

As with any stock, however, the question is whether the current valuation already reflects these things. Recent hikes in the minimum wage will affect about 30% of $WMT’s U.S. stores, and while the drop in gas prices is essentially turbocharging the company’s results now, there is some question whether this effect will still be seen in six months. With a forward P/E of 16, EPS growth of 5-6% per year, a PEG ratio over 3 and a 2.5% yield,$WMT may be a defensive blue-chip stock, but it is certainly not a cheap one.

Wall Street’s opinion of Wal-Mart is typical of a well-performing mega-cap. Of 31 active analysts, 11 rate the stock a buy, 16 have holds, and four rate the stock a sell. Meanwhile, although $WMT is one of the most actively-watched stocks on Vetr.com, our users almost unanimously rate the stock a sell – only one rating out of ten is a buy. Indeed, the average 6-month target among Vetr.com users is only $79, more than 8% lower than the current quote.

What do you think the future holds for Wal-Mart? Can the stock continue to push higher, or has it already priced the good news? Make a rating!