Online Traffic Boosts Traffix
12/19/2003 12:00 am EST
"Over 75 years of evidence proves that equities are the top-performing equity class, and that within equities, smaller-cap, value stocks deliver the best long-term returns," says John Buckingham, editor of The Prudent Speculator, whose portfolio has risen at a 21% annual rate for 25+ years." Here's his latest value and growth play.
"It isn't every day that our value-oriented strategy allows us to recommend a stock trading near its 52-week high. But then again, it isn't every day that we find a high-yielding, profitable, and financially strong growth stock like Traffix (TRFX NASDAQ), a database marketing and management company for a proprietary and affiliate database of tens of millions of permission-based online consumers. The company acquires customers and provides customized consumer data for its corporate marketing partners from its database and Web sites. Traffix owns a number of online businesses including iMatchUp.com (an online dating website), GroupLotto.com (a free lottery) and AtlasAutomotiveGroup.com (a Web site dedicated to providing automotive information and offers).
"While some fear that Traffix will be crimped by anti-spam regulations, it is important to note that its customers opt-in to receive online solicitations. We understand that some may still be uncomfortable with its businesses, but Traffix has posted profits from operations in 17 of the last 18 quarters with net income in the most recent quarter (ended 08/03) coming in at $0.05 per share, despite a 20% decline in year-over-year revenues to $8.5 million. On a sequential basis, Traffix has turned in a revenue increase of 15% and perhaps more importantly, cash and marketable securities on its balance sheet rose to $2.90 a share, up from $2.84 in the May quarter. The company presently has no long-term debt on its balance sheet and its current ratio is 6.4. We might be willing to buy TRFX simply based on the information above, but the company has given investors an added bonus of a hefty $0.08 per share quarterly dividend. With the stock yielding over 6% and trading for just 1.5 times book value, we would buy TRFX below $5."
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