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Why I Bought Shutterfly, Inc. (SFLY) & Think Its Multi-Month Breakout Will Continue

Posted by Timothy Sykes on Thu 5th of Feb, 2009 05:47:40 PM

First, take a look at the chart:

perfection1 Why I Bought Shutterfly, Inc. (SFLY) & Think Its Multi Month Breakout Will Continue

Yup, that’s a picture perfect 4-month breakout just above $8…and even more impressive is today’s intraday chart:

intraday1 Why I Bought Shutterfly, Inc. (SFLY) & Think Its Multi Month Breakout Will Continue

…which I highlight because it looks as if it wasn’t sure if it wanted to break the key low $8 resistance, basing just under it before breaking out (I waited for hte breakout before entering, the main problem with my recent HRZ trade) And here’s the TIMalert I sent to subscribers just minutes before it broke $8.20:

Bought 2000 SFLY at $8.18…awesome earnings last night, breaking out of intraday uptrending pattern, breaking out of multi-month pattern, look at the chart, its beautiful… book value is $6.60, valuation is cheap, VPRT-style, which kept going after good earnings…limited downside, i’ll cut my losses if it goes below the mid $7s, my goal is $9+

So what caused all this perfect intraday/multi-month breaking out? ‘Twas their earnings report. My favorite quote was:

What became very clear during this Q4 is that our strong brand, combined with a relatively low cost, high sentimental value and a holiday-oriented product line, has the potential to produce solid operating results even in times of great economic challenge

Which even the usually-dumb-as-Vick ANALysts have a hard time faulting:

SFLY maintained Buy at Jefferies
Jefferies believes SFLY reported better than feared Q4 results and feels that while management gave a cautious FY09 outlook, shares are attractive trading near cash levels. The firm maintains a Buy rating and $10 target on the stock.

SFLY appears to be holding up well, says Cantor
After Shutterfly reported Q4 results that Cantor Fitzgerald views as strong, the firm is still confident about the company’s long-term potential. Cantor Fitzgerald maintains a Buy rating on the stock.

SFLY valuation is attractive, says JMP Securities
After Shutterfly reported higher than expected adjusted fiscal Q4 EBITDA, JMP Securities thinks the company has an opportunity to increase its market share over the long-term. The firm maintains an Outperform rating on the stock.

Considering the stock is down from the $30s just 15 months ago to the $7s, dropping 80%…funny, I’m up 229% since then!…and it’s got a book value of $6.60/share, this thing doesn’t even have much downside here.

If, tomorrow it can get/stay positive on the day above $8.20-$8.25, methinks it can really run…as both similar plays HRZ and VPRT spiked 10% after their initial earnings spike days…which brings me to my ideal exit point of $9ish tomorrow or Monday. Oh yes, earnings turnaround on stocks that have been hammered have a way of extended their gains.

And even more important, since it was sideways for so long today just under $7.80, that makes for a nice exit point should the stock not surge, should people not discover what a nice earnings turnaround breakout this thing is, so here in the low $8s, there’s 30 cents of potential downside and 80+ cents of potential upside….that’s a damn solid risk/reward ratio, especially on an earnings breakout play.

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  • nash, if a stock doesnt act EXACTLY THE WAY I WANT IT TO, I GET OUT
  • Nash
    Tim,

    How could you be so confident on your SFLY play (according to this article) and only make 12$ out of it? You could have done so much better!

    Why did you get scared and got out so early?
  • martin, as i explained in my email to u which u ignored, i dont have time to keep dealing with your shit, i like to have fun with idiots, most bloggers would jsut delete them...if u have any concerns email me or list everything in 1 comment so i can respond with a full blog post
  • Martin Vanderson
    Tim,

    If you consider yourself an honest web blogger who doesn't hide from any criticism, then why change/not post some of my comments?
  • insults are meaningless and yes my readers are dumber than your normal bunch but then again everyone in finance has been proven to be pretty dumb lately...anyone can read, anyone can trade
  • Wondering
    Tim,

    I was just wondering how do you feel about your readers? Does the money you make worth the insults?
  • if u guys truly watched my DVDs, especially pennystocking part deux than u should be banking on SKYT and now SFLY...how about u go watch again
  • Hedo
    die: you weren't entertained? Is it true he says, "this is for entertainment only, you won't get rich from these" as a precursor on his DVDs? If so, then his entertainment is all you are paying $500 for and you have no one to blame for it but yourself.
  • die
    Tim, I hope you burn in hell. I have wasted my hardly-earned money on your DVDs.
  • Peter
    The ignorance exhibited by the haters is truly astounding. Go Tim!
  • cheech
    hey timmy...where is tim clemens when u need him???? you def. need some ass kissing on this article/feedback...since clemens isnt showing up lately...I think you are doing a great job...just like the guy said above...who on this board has 190% gain in 2008? They are all just haters because they are jealous of your youth, talents and money!

    Haters dont mean shit.
  • StupidTim
    "i still end up with 200% returns"

    You are freaking stupid. You and your biz so called model doesn't worth a penny.
  • dont get me wrng, id dint even profit that much, as u'll discover i screw quite often and i still end up with 200% returns...its all about identifying setups and implementing solid rules...welcome to my biz model...turning assumption making haters into profiting students since 2007!
  • Hedo
    See what you did? Well, since you already "did" something, then I know you got in at 8.16 and got out < 8.65, probably profitted <$500. That's not the type of trading that I do, so I'm not going to sign up for the non-alerts, but I enjoy the banter on here with you. I'm not confused either, I'll read your analysis of the $500 profit once you post it either today or in a few days.
  • hedo, signup to timalerts and u can see exactly what i did, otherwise, stay confused here on the free site...all i know is it was a great setup that i identified correctly, apology accepted
  • Hedo_Turkoglu
    Tim SFLY is soaring! Will you sell mid 8's to secure a small, yet profitable trade? Or are you still stubbornly stuck on 9? You know you want a green number on your front page.
  • Martin Vanderson
    i like wasting tim's precious time, but no more. goodbye
  • not looking to day trade, if u'd learn about my strategy goal is 1-2 days and volumes of millions...now go watch my DVDs and stop asking questions i answer in them please
  • Mike
    Ok million dollar portfolio is a bad example.

    You are running a day trading alert business. Meaning you and your subscribers need to get in and out of positions immediately.

    You choose stocks that have 100,000 shares traded a day. If you have like over 5 subscribers following you on this particular trade it would take forever for someone to follow through on the pattern. Forget it if you have over 10 people with a $1000 position.

    How are you looking out for your subscribers - in my opinion you are only looking out for yourself and front running them.
  • u guys ar elittle babies, do more research and see i have plenty of losses:

    http://timothysykes.com/tim/

    show me some more supernovas and u'll see less losses, until then its just about controlling losses, which isnt that hard if u're diligent
  • Steve Johnson
    Tim,

    Your method is leading to losses more often than before. Is 'taking losses' all hat you could come up with?
  • "If you had a portfolio of a million or more you would be wasting your time with this stuff"

    first smart thing u've ever said, and i u read more than 10 of my 1,000+ blog posts, u'd see i say over and over and over and over and over again my strtaegy is for poor people, it doesnt matter how small your account is, u should still be disciplined
  • Mike
    This stock trades 100,000 shares a day. I know you like crappy penny stocks but shit you couldnt hold more than a few $1000 position.

    If you had a portfolio of a million or more you would be wasting your time with this stuff.
  • what have i done for people lately? taught them how to take losses quickly...probly even more important longterm than any gains i will ever provide
  • Hedo_Turkoglu
    Ah yes, but as you know better than anyone, this is a "what have you done for me lately" business. Luckily, you still have DVDs and alerts to market though. Why is your stock getting hammered this morning (7.91, -0.25) while the rest of the market is up (+114/+24) ?
  • Martin Vanderson
    Great play Tim. How many losses in a row??? Your so called "students" are poor college kids and now you are stealing their tuition money. Learn how to trade and stop bullshitting people. You got lucky 10 years ago, but your style is as dated as your hairstyle and glasses. Why don't you go work for a firm and learn how to trade.
  • woooo hedo, small losses/gains dont matter, this was a high percentage setup, if u learned so if i play it 100 times, i'd win 70+ times, will keep doing them and if u look at the data set form 2008, u see i win the majority of the time, welcoem to successful trading
  • Hedo_Turkoglu
    The unemployment news this morning isn't looking too good for your SFLY. Well on your way to your 5th consecutive loss, it's all good. All gamblers need to ride it out and eventually work their way out of the mud. Down to $8.05 and steadily declining, I wonder if you still have your mid 7 sell off target to cut your losses?
  • younggunz
    OK everyone who has made $1,000,000 trading stocks please raise your hand.
    Now how about everyone that made 190% trading in 2008 raise your hand.

    Something tells me there's only one person that commented in this blog post that raised their hand for both.

    And one more for anyone that actually knows Tim's past...Everyone who actually trade that has taken a 30% loss on a single trade you can raise your hand too.

    Yeah Tim acts like a prick when responding to shithead comments. Everyone that has read his website for any length of time shouldn't expect anything less. Quit being little babies.

    I am not holding any shares of shutterfly and time will tell whether it will truly break out. I do disagree with one poster thinking that rallies lately have been short lived...I think its the opposite for many stocks that are going green despite the overall market going red. Having so many people desperate to find anything thats showing strength and jumping all over it has prolonged many breakouts.
  • when do i ever say i'm right 100% of the time...on the contrary, i've never even claimed to be that great a trader...its too bad any of u are illiterate, tough to teach when u cant read my lessons :)
  • exfan, dont blame me for your laziness, in my DVDs, i detail how to find shares to short, not many to go around but they are there...u probly just dont have the passion to wake early every morning and try, i pity u
  • Omaggio
    Anyone can be up 200% on a small account???? You must be slightly mentally handicapped. That is ridiculous. And if you have any experience trading then you know it....wow...Anyone...if anyone could do it then why are 90% of people losing money...at least 90% of people....lol
  • ExFan
    I fell for the timmy scammed and signed up for a tos account. The truth is probably out of the thousands that try to short a penny stock, maybe 1-2 people can get shares. the site is a scam to sell dvds.

    tim you keep saying you're up 200% but anyone can be up 200% on a small account. when you had the fund you failed cause your strategies don't work on big accounts.
  • Peter
    Tim keep up the good work. Once in a while everybody gets a few bad calls in a row and that attracts the flies...just a part of trading and the haters can QQ more about it...whatever suits their pathetic e-pride maintenence let em wail more and more.
  • FelixRohatyn
    I see some of these comments, and i feel like giving my 2 cents. I have not been following Tim, but i did meet him when he gave a speech in University at Buffalo, and red his book which i though was very interesting and entertaining, and i learned quite a bit. I must say that unless anyone here made more money, or lost more money then Tim and made it back again, had a bigger hedge fund, or have a better strategy that works, maybe these angry comments are a little too much? Now i'm going to get bashed, lol.
  • Timothy Sykes
    stop posting pretending to be me, this isnt elitetrader, grow up
  • Props
    I give TIM props for being soo passionate with this site. I would have either sent feedback to some clown I hired to filter, or let anyone post and never read any of it. At first I wasn't sure about TIM, then I didn't like him when he promoted stuff that wasn't his own (other people's books), but now I think he is enjoying the attention and making money in the process. Am I jealous? Yea, a little, but only about the cash. And, as well all know, after awhile you realize life isn't really about the money. late.
  • bb
    Tim, you are a jackass. You keep saying to people to educate themselves but in fact it is time for you to get educated by your readers. You just insist on your ideas 100% of the times like a child. I haven't seen a single time that you stand and appreciate a negative-looking comment. Enjoy your losses which you deserve them.
  • vestor707
    To much Risk not enough reward. In my experience on the long side, stocks that have to rise a large amount on the day of the breakout tend to be failures. I like to look for stocks that are up 1 to 2% on the day of the breakout. Not 25% on the day. But it’s just an opinion.
  • yah justin, haters are half my traffic and sales once they realize this stuff works...reaper was my biggest hater and now he's up $50,000 in the last few months
  • Justin
    Tim its soooo funny how half your comments are haters who read your posts...lol makes me fuckin crack these guys are sooo fuckin jealous of you! keep doin ur thing man!

    im def gonna be following this SFLY tmr!.
  • I'm a big fan of Shutterfly as a company, not a holder of the stock, but thanks for bringing it to my attention.
  • Brandon Fredrickson
    Buying or not buying a stock simply because it's PE is "too high" or "too low" is about as smart as throwing hundreds of billions of dollars at failing banks. Funny how it's the same people who advocate both ideas.
  • john PE is irrelevent here, and in most cases, stocks has held strong the past few months as other stock have tanked, spiked right away on these earnings, hardly any downside here
  • John H
    I do Timmy - I have played many a stock on earnings momentum - bull market, I'd totally agree, but these days, rallies are short lived and you end up trying to beat the next guy rushing to the exit. Bottom line, how can you justify valuation at 50 PE these days? You just can't! Christmas hype is over, and these guys are back to crap earnings for the next 3 quarters.
  • hedo, just 85% of your comments are blocked because theyre useless, u ingrates should be kissing my toes for even giving you a site to express your useless thoughts
  • john, u dont understand earnings momentum, but u will soon learn
  • Hedo__Turkoglu
    TimCantTrade: Are you just realizing this? Tim has been doing this for years, sends out non-alerts that talk about how no on can find shares to short, but congrats to "those" who did. He's got to pay the bills somehow, so he's a brilliant marketer selling scam dvds and "non-alerts." His annual income these days is average to someone with a bachelors degree fresh out of college, can't pay the bills.

    Tim: Why have 85% of the comments on your board been all negative for the past months? Answer: People are sick of the gimmick.
  • John H
    Hmm, 6 for 6 in losing trades? You are right - you are awful at longs and should stick to shorts. You jump in end of day on an earnings report where its already gone up 25% in an environment where everyone is chicken chit and barely hold stock longer than the time between bowel movements? To top it off, you recommend one now sitting at a PE of 50 and barely expects to break even this year?

    Chart breakouts don't work out like they used to - you have to jump early and get out early...I'd expect a selloff tomorrow and another loss for you (unless you take a desperate dime gain or something on open). What's even funnier, is your goal of $9+ - you and me both know you don't have the balls to hold that long. You'd blow your load at $8.50 max...IF you are lucky to even get that high before the selloff.

    Enjoy your pain.
  • TimCantTrade, i will cotninue waiting for proper setups, teaching others to do the same, u will become angrier as my popularity grows, i wish u education
  • i somehow thought i could make readers smarters/lose less, but i think its going the opposite way, i blame cnbc
  • in what world do u live where a 200%+ return in the last year or so is 'failing so many times'
  • friend
    "Considering the stock is down from the $30s just 15 months ago to the $7s, dropping 80%…funny, I’m up 229% since then!"

    Tim, I think you have got some serious psychological problems. it is stressful to promote a strategy that is failing so many times. Just the amount of bullshit you write over and over in your posts is concerning. Because you are still a child you may not be able to handle the stress you are under. So you go on defensive and destroy your credits more. Many people got hurt because of financial stuff, and you are not the last one. Your last 30 posts are almost all pure bullshit.
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