This column was originally published on RealMoney on July 20 at 12:46 p.m. EDT.
yesterday, I am offering five more Internet stocks to own today. I started with three niche players and Sirius Satellite, but Tuesday's earnings report from
brought the stock to my attention and the stock's action today put it at the top of this list.
The fact that this stock was down 10% in the premarket and some $4.35 midmorning forced me to take a closer look at its numbers.
What happened? Did it lose money? Did it kill someone? Let's see.
Revenue was $875 million, up 44% year over year. International revenue was up 84%. Gross margins were at 87%. Unique users were up 27% to 379 million. Paying subscribers were up 58%, and the cash position was up $1.1 billion from the prior quarter.
True, it guided revenue down for the year to $3.2 billion from $3.68 billion, but I expect its newly announced foray into contextual advertising is going to make a dent in
once it's up and running. Yahoo!'s personals services, financial content, online classifieds and more, offer it many more areas to deliver targeted contextual ads. Yahoo! is a definite Internet stock to own here.
Now to the niche stocks. These three companies have been building their brands over the past five years, while consolidating their balance sheets and, in general, fattening themselves up (in my opinion) to get acquired by the further entry of the media companies into the space.
owns Broadway.com, which sells theater tickets online. The company also owns 26% of MovieTickets.com, the online movie ticket vendor that sells tickets for AOL, MovieFone, MSN, Lycos
The New York Times
The New York Times
also just signed a deal with Broadway.com to sell tickets through the Broadway.com site.
Other owners of MovieTickets.com include
at 4.25% and AMC Entertainment, which was one of the founding partners and now, with AMC's takeover of Loew's theaters, stands to increase market share over Fandango, which is Loew's ticket seller. While this is a more speculative play, I think the potential growth of MovieTickets.com is going to be the driving force.
2. I can't believe
survived. Congratulations. In 1998, I became intimately familiar with the site's operations when I helped diamondcutters.com work out a deal with The Knot. The company was going public around that time and I honestly didn't think a niche site about weddings would have the weight to survive as a public company. But it showed a net profit of $1.275 million last year on $41 million in revenue (up from $36 million the year before and $29 million the year before that) and actual cash flow from operations over the past 12 months has been $1.9 miillion.
With $22 million in the bank and no debt, it looks like the company is here to stay. The wedding "demographic" includes not only what is spent for the wedding: gowns reception and registry, but also what is spent as a newlywed. This is a period when women are making decisions about every aspect of life: cars, homes, furniture, home electronics, etc. Theknot.com expanded into this space with thenest.com, and it also just launched the dating site, GreatGirlfriends.com.
( PRVD) is perfect for me. I'm always late with flowers. There's just too many days in the year for which one needs to order flowers, so I really need a way to set up all the days, messages, orders in advance at the beginning of each year and then I don't have to think of it again (I hope my wife and mom are not reading this). Failing that, Provide Commerce, operator of ProFlowers.com is the next best thing. It has streamlined the traditional model by shipping directly from the flower growers, cutting down on costs and boosting margins.
After a record Mother's Day this year, the company upped guidance for the fiscal year ending June 30, 2005, to 43 cents to 56 cents a share, and sales are now expected to range from $171.5 million to $175 million. Provide has shown steady sales growth too, reaching $128 million in 2004 from $88 milion in 2003. Given the company's $300 million market cap, $70 million cash in the bank with no debt, and $21 million in cash flow from operations it's a good start. My guess is the company gets acquired at the $35-$40 level within two years.
Sirius, I'm Serious
Up front I have to admit that
is not my usual stock pick. It loses money and will continue to do so for at least two years. But between now and the end of the year I have just two words to support this pick: Howard Stern. People are going to buy the dream here and the dream happens in the fourth quarter. Sirius is down 10% on the year and recently sold off due to a UBS downgrade. Meanwhile,
( XMSR), its lone competitor, blew away subscriber expectations last quarter and people expect Sirius to deliver a similar performance. This, its recent content with the NBA, NHL, NFL, and Nascar, plus the impending January start of Stern's show and the anticipation of fourth-quarter gift-giving (I want one for my car actually, so I hope my wife reads this part) should drive this stock higher between now and November.
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James Altucher is a managing partner at Formula Capital, an alternative asset management firm that runs several quantitative-based hedge funds as well as a fund of hedge funds. He is also the author of
Trade Like a Hedge Fund
Trade Like Warren Buffett. At the time of publication, neither Altucher nor his fund had a position in any of the securities mentioned in this column, although positions may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;
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