One hard truth about investing is that whenever you buy or sell a stock there is, by definition, someone out there in investing land who is more than willing to accommodate your request. It wouldn't be a stretch to view this person as an odds-maker who is essentially "booking" your bet. One of you is right on the money, and the other one, well, probably ends up kissing the money goodbye.
Whether you are a raging bull or a disbelieving bear, there's always one type of risk that you can never run away from -- the risk that you'll end up being wrong.
Two sides to every coin
Here at the Fool, we advocate listening carefully to both sides of any stock story -- the bull and the bear case -- so that investors have a chance to make informed and objective investment decisions. It's that kind of philosophy that inspired the creation of our Dueling Fools column and award-winning message boards; it also gives our writers and analysts the freedom to disagree (sometimes vehemently!) with one another.
With that in mind, I'm beginning a weekly column that features three closely contested "investment battles" taking place over in our Motley Fool CAPS community. Unlike stocks such as Ceradyne
By watching both sides go at each other with spirited head-shots, maybe we can glean a few investment insights into some of these stocks. And if not, hey, at least we'll get to witness a good old-fashioned bullfight. Ole!
So, without further ado, this week's two stock skirmishes involve:
|
Company |
CAPS Bulls |
CAPS Bears |
CAPS Rating |
|---|---|---|---|
|
Housevalues |
131 |
103 |
* |
|
Salesforce.com |
79 |
76 |
* |
Naturally, these stocks should be thoroughly researched before any kind of decision is made on them -- whether buy, sell, short, or waffle. Besides, with stocks this hotly debated, investors should proceed with extra caution.
But just for starters, here's a quick glimpse of some of the toe-to-toe action regarding these stocks, with a little color commentary thrown in by yours truly.
Not completely SOLD on Housevalues
Kirkland, Wash.-based Housevalues has definitely been having a rough time lately. In early November, the provider of online real estate services (and Motley Fool Hidden Gems selection) reported its first-ever quarterly loss since becoming a publicly traded company.
Many bears in our CAPS community believe that a deflating housing market, coupled with an unsustainable business model, will eventually lead to Housevalues' demise. As CAPS All-Star and Housevalues bear JetPilotJRS puts it:
I see realtors meeting the same fate as travel agents. Consumers are becoming smarter at avoiding ridiculous commissions for something they can do themselves. On top of that, look at the housing numbers.
Yet despite those arguments, more than half of our CAPS players with an opinion on Housevalues continue to be bulls. Most of them, however, aren't exactly fans of the company's business prospects, either. Instead, much of the bullish argument revolves around the company's current financial picture, which is steadily gaining attraction as a "deep-value" turnaround play.
CAPS All-Star mtsafe is one bull who thinks the balance sheet is far too tempting to overlook:
Although the bear comments are convincing, you simply cannot deny that this company is in a good cash position with negligible debt.
Sales forced into overtime
Unlike Housevalues, which reported disappointing third-quarter results, Salesforce.com grew its revenue an impressive 57% for Q3. Salesforce.com provides customer relationship management software, but with the unique twist of "renting" out its products through an annual subscription.
Many of the Salesforce bulls in CAPS give a big thumbs-up to the company's products and the fact that the annual subscriptions -- as opposed to huge up-front costs -- allow its clients to earn a more dependable return on their investments.
One CAPS All-Star, luisferfranco, is not only a Salesforce.com bull, "he's also a client":
This is the kind of company that represents what the industry of software should be in the next following years. We are evaluating the use of their services (in a quite large company) and frankly, it's amazing.
But, of course, this wouldn't be Bulls vs. Bears if the whole story was just peachy, now would it? Unlike Housevalues bears, who are highly critical of its operating business, the majority of Salesforce.com detractors really don't have a huge problem with the company's software. Instead, their worries lie in the steep valuation that Mr. Market currently has for the company.
At the time of this writing, Salesforce.com has a market cap of $4.38 billion and sports an astronomical price-earnings-ratio of more than 700. Not exactly a statistical bargain, is it?
CAPS All-Star and newbie mytworupees certainly doesn't think so, and even goes so far as to predict some short-term disappointment in Saleforce.com shares:
There is no way this stock can sustain the high P/E. They have a really good product. But their growth rates have become like any other company. It is time that the stock should reflect that. I assume that this will happen with the next few earnings announcements.
But what's your opinion, Fool?
There you have it, Fools. Who do you tend to agree with? The bulls? The bears? Lions and tigers?
There's no doubt that the competition regarding these two stocks will only get more intense over time, and it probably needs a player like you to finally tip the scales in one direction. If you're licking your chops to get in on the action, click here to join the CAPS community absolutely free.
See you next week, Fools. Have a blast in CAPS land, but just try not to provoke the wild animals too much. As you can tell, they really know how to bite back!
Fool contributor Brian Pacampara loves the Chicago Bears and likes the Chicago Bulls, but he doesn't have a position in any of the stocks mentioned. The Fool's disclosure policy is always a raging bull.
