A Board Member Clicked “Buy” on ValueClick

On December 13th, David Buzby, a Board member at ValueClick Inc (NASDAQ:VCLK) bought shares of the company’s stock at prices generally between $19 and $19.50. While Buzby didn’t add to his direct holdings, he bought 3,500 shares for his IRA and his 401(k). His spouse’s 401(k) also bought 1,000 shares. ValueClick primarily provides technology and services to marketers but also operates its own websites including couponmountain.com and investopedia.com. Buzby had last bought shares in June 2011; this had been a smaller purchase, and had come at prices of about $16.50 per share (see a history of his insider purchases). Because studies show that, on average, stocks bought by insiders tend to beat the S&P 500 (read more about studies on insider trading), we think that it’s a good idea to take a closer look at these stocks when they come up to see if they do in fact look like good buys.

The company reported a 26% rise in revenue in the third quarter compared to the same period in 2011. Essentially all of this growth came from the Media segment, with much of it coming from acquisitions. However, ValueClick Inc’s other two segments did report higher operating income, and with better numbers coming in from Media as well pretax income increased 25% (net income was down due to a tax benefit in Q3 2011). Earnings per share for the quarter came in at 31 cents, a bit higher than the average for the first two quarters of 2012.

Chuck Royce

On a trailing basis, ValueClick’s P/E is 17; if we annualize the most recent quarter, we get 16. Analyst estimates are for a very strong fourth quarter, and continued improvements in 2013 imply a forward P/E of only 11. We’re skeptical of seeing that sharp an improvement, unless ValueClick Inc is going to somehow further improve how it has integrated its recent acquisitions; the trailing numbers, and certainly the figures from last quarter, should account for the benefits of these deals. The market is also wary, as the most recent data shows that 11% of the outstanding shares are held short. In addition, our database of 13F filings doesn’t show much hedge fund interest in the stock: the largest holder of ValueClick, out of the funds we track, was Chuck Royce’s Royce & Associates with a position of 1.8 million shares, a small position for that fund. Find Royce’s favorite stocks.

As a combination of a marketing solution and a content provider, we would compare ValueClick to a set of businesses including Digital River, Inc. (NASDAQ:DRIV), Yahoo! Inc. (NASDAQ:YHOO), Google Inc (NASDAQ:GOOG), and AOL, Inc. (NYSE:AOL). The first three of these stocks trade between 15 and 17 times forward earnings estimates, which would place them at quite a bit of a premium to ValueClick if the Street is correct. We’d noted, of course, that investors should be skeptical that the company can improve to that degree; however, even looking at ValueClick’s trailing earnings it seems priced at about the same level as these peers. Digital River, a $470 million market cap commerce and marketing company, has been seeing lower revenues but has a large cash hoard. Yahoo, meanwhile, reported flat revenue last quarter versus a year earlier and we think that we would avoid the stock. Google’s financials- sales up, net income down- have been skewed by recent acquisitions, and we think that it’s probably best to wait before making a move there; the trailing P/E is 23, but we think that it has good growth prospects as well as the potential to achieve savings from better integrating Motorola Mobility Holdings. AOL is another special case; it too has a good amount of cash on its balance sheet, but it trades at 22 times consensus earnings for 2013 and just doesn’t look like a good value investment.

We aren’t sure that the sell-side has next year down right, but ValueClick does seem to be improving, including over the first two quarters of the year. If the company continues to grow, then given its trailing earnings multiple it may end up cheaper- though, of course, a significantly smaller-cap stock- than Google or Yahoo.

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!