Update 2/3/14

NetLaZon=$927 vs $979 down 5.3% since 1/29/14


 Momentum Still Rules

With not much to say about biotech today except it appears unfazed by macro news (see BIIB $316 up 4%,  MDVN $85 up 12%,  ILMN  $150 up 3.4%).  Today I’ll delve into the media stars outside of biotech.

NASDAQ Down 0.70%,  S&P down 0.70%, QQQ down 0.64%,  IBB ($245) up 0.34%  at 1:30p

AAPL ($501) is in no man’s land between value and growth. You all remember just 18 mos. ago when it could do no wrong as it soared above $600. Now that it has a forward PE  of 10.50, a dividend of 2.4% and a P/S of 2.68 Apple can’t get love except from Carl Icahn and of course all of its satisfied iPhone users.

Amazon (AMZN) by contrast with a forward PE of 148 never needs to beat or exceed forecasts because eCommerce is apparently an infinite market. With a new business model of  “cloud services” combined with a decline in mall retailing, exacerbated by bad weather, we have no end to on-line purchases of all basic needs even groceries.

In contrast to AAPL, new age momentum stocks like Netflix (NFLX), Tesla (TSLA) , and Twitter (TWTR)  have solid stories with infinite market potential. Hard nosed financial analysis of their stocks can be delayed for some time because they are about the future. For $10 a month and a $20 ISP you can watch all the movies and TV you want (except sports) , no bandwidth restrictions with Netflix. Twitter can deliver any message in real time globally offering unlimited advertising potential. So the stories go.

In the recent Jan 25 issue of Barron’s Part 2 of the Roundtable, well known contrarian and gold bull Marc Faber offers some bearish picks in the momentum universe. He recommends shorting a basket of these stocks among them Facebook (FB), Netflix (NFLX), Tesla (TSLA), Twitter( TWTR), and 3D Systems (DDD). We now have a 3D biotech stock Organovo (ONVO) a Company that is focused on 3D printing of body parts and today announced liver tissue delivery!

All of these momentum stocks have the following advantages in today’s “new age” bull market:

  • No worries about financial metrics and valuations other than top line growth. Misses rarely matter.
  • Unlike biotech, no worries about clinical trial results.
  • Evolving disruptive business models.
  • Big money driving momentum.
  • Limited risk from macro news and cyclicality.

Yesterday we combined three momentum stocks into one acronym called NetLaZon: add the prices of NFLX TSLA and AMZN and you get a price of $979. We will track this price along with TWTR ($60), a recent IPO. All are down today.

No opinion on any of these stocks outside of biotech.


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