Gains from Online Leads

01/07/2005 12:00 am EST

Focus:

Ian Wyatt

Publisher & Chief Investment Strategist, Wyatt Investment Research

As editor of Growth Report, Ian Wyatt is very comfortable with stocks with both high p/e ratios and strong growth potential. He often finds his favorites in the Internet sector, including his top pick for 2005, an Internet advertising company.

"Aptimus (APTM OTC Bulletin Board) is a leading Internet direct marketing firm focused on delivering highly qualified customer leads to its clients. The company already counts several Fortune 500 companies as its clients. Procter & Gamble used Aptimus for their Crest White Strips marketing campaign and generated some 800,000 leads. The company has subsequently begun lead generation with Aptimus for Olay, Herbal Essences, and Pantine ProV brands.

"Fiscal 2004 is a stark change from previous years, with Aptimus reporting strong revenue growth in the first and second quarters, and turning a profit in the second quarter. For 2004, the company expects revenues of $14 million and net income of $0.30 per share. For 2005, Aptimus expects revenues of $26.5 million, an increase of 89% over 2004 guidance. GAAP net income is expected to be $0.80 per share, or bottom line growth of 185%.

"We believe that Aptimus remains relatively unknown among a crowded field of internet advertising companies. The shares are trading at $25, giving the company a p/e of 83 based on 2004 guidance and 31 times project 2005 earnings.  We believe there is significant upside potential for this pure play in the growing internet direct advertising business, and feel that revenue and income growth of 89% and 185%, respectively, justify the high p/e ratio that shares currently command. I’d ad that given my confidence in the stock, I owns shares of APTM."

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