Pandora's more attractive than other recent web IPOs
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Author: Mitch Jones
Covestor model: Price Momentum
2012 is now well on its way. One notable event of January was taking my two boys, ages 2 and 4, to experience the Fort Worth Stock Show and Rodeo. I explained to them what the "stock" there is, but now my boys just think I trade cows and sheep on the computer every day. Our favorite part of the show was seeing the beautiful black Limousin cattle. They are large, muscular and sleek. And they seemed to be popular at the auction.
Likewise, Pandora (P) stock was popular in January. It turned out to be my best trade in a lackluster month. After several months in a typical post-IPO slump, Pandora is up sharply so far this year. I do not own it now, but long term I think it could be a good play. I think it is more fairly valued than other recent IPOs, such as Groupon (GRPN) and Linked In (LNKD). While each has a valuable user base, I think Pandora has a service that is more difficult for another startup to replicate. It has spent years tweaking its smart algorithm for choosing songs users actually like.
On the flip side, I had some bad luck with First Financial Corporation (FFKY). The banking company has been on a steady decline in the last five years, but shares of the company spiked recently. The buy turned out to be poorly timed, coming at the top of a week long run up.
I currently have no positions in any of the stocks mentioned (including Limousin cattle) and have no plans to initiate a position in them.
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