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Another Facebook derivative name that has a great chance of racking up huge sales if management executes is
Skullcandy(SKUL). Social networking Web sites and the hardware and equipment for mobile devices are all tied together, and Skullcandy fits right into that ecosystem. This company develops and distributes headphones and other audio accessories to retailers throughout the U.S. and to distributors in various countries worldwide. Skullcandy also makes iPhone cases, iPhone docks, iPod cases, iPod docks and even clothing, bags and backpacks. During the last six months, this stock has dropped 25%, and it's virtually flat on the year so far in 2012.
The more people that access social media sites such as Facebook through their iPhones, iPads and other mobile devices, the higher the probability that Skullcandy has of increasing sales of its popular headphones and other products built for such devices. Skullcandy also has a very popular mobile app that delivers geo-located destinations for Surf, Skate, Snow and Moto and up-to-the-second reports. Skullcandy's mobile app has already been downloaded over half a million times. Plain and simple, Skullcandy is entrenching itself into the social networking ecosystem and positioning itself for rapid growth.
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Skullcandy has a market cap of $344 million and an enterprise value of $356 million. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 17.24 and a forward price-to-earnings of 8.83. Its estimated growth rate for this year is 17%, and for next year it's pegged at 22.2%. This is a cash-rich company, since the total cash position on its balance sheet is $10.91 million and its total debt is $1,000.
This stock has sold off pretty hard from its April high of $17.76, with shares currently trading around $12.50. What's interesting about the recent selloff is that it's pushed SKUL right near some previous support zones at $12 to $11.79 a share. I would look for long-biased trades in SKUL if it takes out Wednesday's high of $13.27 with volume. Look for volume that's near or above 606,489 shares.
Keep in mind that Skullcandy is one of the most heavily shorted stocks on the planet. The current short interest as a percentage of the float for Skullcandy is an unbelievable 123%. A strong Facebook IPO could spark a big short-squeeze for Skullcandy if traders see the value I see in these social networking derivative plays.