] HipMojo.com » First Stock I Bought Since August Is…

First Stock I Bought Since August Is…

After the market meltdown in May, there were plenty of buying opportunities but the macro outlook in terms of a bubble in real estate prices (though a reduction in real estate speculation is an overall plus for the stock market), ongoing war and potentially more war made me sit on the sidelines.  I have not bought a stock since August, that one being a company in the online video space that shall remain nameless for the sake of this commentary.

Today, I bought the first stock since then, a company called aQuantive that I have bought, sold, bought, sold and today bought again, everytime making a nice profit.

First bought @ $8 and sold at $17
Second time bought @ 18 and sold @ $26 just this past month.

I saw the stock trickle up in the past weeks leading up to the recent quarterly announcements.  I knew the stock would not do well because Q3 is not very strong in online advertising.  Things slow down in summer, but in the agency world, there is a double whammy because agency people go on vacation and clients too slow down their decisions and meetings. 

It also turns out that the day before they announced their results, Valueclick came out, beat their numbers and upped guidance (my comments on Valueclick here).  Of course, Valueclick is not only growing quickly but this quarter saw results being consolidated from their Fastclick acquisition.  All to say: I rarely short stocks I like (I did with Sandisk and made money but almost lost my shirt, for that click here) but I was tempted before the market close yesterday to short aQuantive cause it had no prayer given everything.

Yesterday the company revealed strong results but did not up guidance, it also mentioned that a key employee left to a competing startup and took his team with him.  The stock got pummeled.

This is going to certainly affect new business development but guess what: I’ve worked in the online media and advertising world and a shortage of talent and overcoming it is and has always been par for the course.  It’s a macro risk in the industry.  There are simply not enough experienced people, but a quality company like aQuantive can and I think will overcome this.  Will it slow down sales and new business?  Of course.  Is it going to kill the company?  No.

Now that the news is out, I assume it’s reflected in the price.  By all means go do your own research because even at the reduced market cap of $1.8 billion, aQuantive is not exactly cheap: its P/E is 44.75 (according to Yahoo! finance), its forward P/E is 31.55 but its 1-year price target is $30.  Seeing a $4-5 drop in price is a nice entry for a leader in a space growing like gangbusters.  Furthermore, aQuantive is a nicely diversified player in the online advertising services space so if you want to play the market, this is as good of a bet you can find.

The company’s growth rate has been above the overall market’s, which is already growing quickly.  And the market will be consolidating in years to come.

I own shares of aQuantive (again) as of today, but that does not mean you should do, do your research and get professional advice!

Tags: , , |
Posted By: Ashkan Karbasfrooshan | Nov 3rd

Subscribe:


Leave a Reply

*
To prove that you're not a bot, enter this code
Anti-Spam Image

Subscribe:


« « previous post | next post » »
Admin

Shortcut:
HipMojo.com

Subscribe:

Search Site:

Categories:

Archives:

Blogroll: