Robert A. Desmond's  Instablog

Robert A. Desmond
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I have been in the financial services industry for 25 years and founded The Contrarian Trader in 2005.The Contrarian Trader serves to educate traders on contrarian trading techniques to help enhance their portfolio performance.
My company:
The Contrarian Trader Inc.
My blog:
The Contrarian Trader
  • Does Websense (WBSN) still make sense?  0 comments
    Mar 10, 2010 11:49 PM | about stocks: CHKP, WBSN, MFE, SPY, UUP, QQQ, IWM
    Websense (NASDAQ:WBSN) is in the Internet & Software Services sector with it's core business focus on integrated web, data and email security solutions. Year to date the stock has rallied by almost 33% and is fast approaching it's September 2008 high of $24.60.

    So the question for this trader is where to from here? Websense trades at first blush at a fairly reasonable 16% PE. However, when compared to competitors such as Check Point Software Technologies (CHKP) which carries a forward PE of 13.97. Let's drill down a bit further and look at the growth rates for which currently has a Quarterly Growth Rate of 2.2% vs... 26.7%. With Check Point's performance YTD being in essence flat it would appear to be a far better investment for the longer term. That being said I am a trader and I see the opportunity to make money in Websense by going short the stock. The question is a stock that has performed so magnificently over the past 3 months when does one get short. That leads us back to the beginning of the article.

    We are nearing an excellent entry point at $24.60 which if you are disciplined and wait will have not only a great entry point but a great risk to reward entry point as the logical stop loss point will be just above that level. A catalyst for a significant decline Websense and for that matter the NASDAQ, S&P 500 and the Russell 2000 could be a break out of the US Dollar above the 81.34 level. A breakout of the US Dollar combined with the extreme overbought condition of Websense would make for a perfect entry point to get short of this company for a trade.

    Disclosure: No position in Websense (WBSN) or Check Point Software Technolgies (NASDAQ:CHKP) at the time of this writing.
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