Vistaprint (VPRT), a Different Kind of Money Printing Trade

Upside for VPRT should continue as its earnings date approaches

   

The Dow Industrials and the S&P 500 keep on printing profits for traders, and it can be argued persuasively that the chief reason for the rise is the Federal Reserve and its money printing, easy monetary policies. The central bank’s current bond buying scheme of $85 billion per month, in addition to the original “QE” versions—QE1, QE2 and Operation Twist—have put a whole lot of liquidity into the system, and that money keeps finding its way into domestic equities.

Hey, I like the Fed-fueled trade just as much as the next guy, and while I definitely think you can still make money being long the central bank’s money printing trade, there’s another kind of “printing” trade that I like as well—and this one has nothing to do with Ben Bernanke.

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Online provider of marketing print materials Vistaprint N.V. (NASDAQ:VPRT) is a company that makes all kinds of stuff that small businesses need to help them, well, print bigger bottom lines. The Netherlands-based Vistaprint specializes in brochures, business cards, calendars, envelopes, letterhead, mailing labels, etc. Basically, if a company needs it printed, Vistaprint can probably do it.

For traders, the past two sessions have seen VPRT shares print up nearly 8% gains. The move higher in Wednesday and Thursday trade came one day after Tuesday’s announcement that Vistaprint will be reporting fiscal third quarter earnings on Thursday, April 25, after the closing bell. I suspect that report will be strong, at least judging by the trading in the shares the past couple of days.

Technically speaking, VPRT now has spiked well above its short-term, 50-day moving average. The stock’s big March move pushed it back above the 50-day, as well as the 200-day moving average, but I suspect the upside will continue for at least the next couple of weeks heading into earnings.

If we see an upside surprise from Vistaprint, that could continue fueling this stock past the 52-week intraday high of $43.42, a move which represents a gain of more than 9% from current levels. In fact, I suspect that a very good Q3 will help traders print a 10-15% gain over the next two months.

Of course, an earnings miss could cause VPRT shares to run out of ink, so you’ll want to be sure you set a stop-loss price on this one about 7-8% below your buy price.

At the time of publication, Jim Woods did not hold a position in any of the stocks mentioned here.


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