Buy CafePress Inc (PRSS) and a Unique T-Shirt: Shutterfly, Inc. (SFLY), VistaPrint Limited (VPRT)

Both stocks are exceeding profitable, though current revenue growth isn’t leading to higher profits, similar to CafePress Inc (NASDAQ:PRSS). Analysts expect Shutterfly, Inc. (NASDAQ:SFLY)’s earnings to drop from $0.61 to $0.49 in 2013 before a jump next year. Likewise, VistaPrint Limited (NASDAQ:VPRT) is expected to report virtually flat earnings in FY13 with a big jump to $2.44 in FY14.

If analysts are accurate, 2014 would be a breakout year for all of these stocks, yet nothing is apparent that would justify improving margins next year.

Stock action

CafePress Inc (NASDAQ:PRSS) continues to dramatically underperform the group during the period since the IPO.



PRSS Total Return Price data by YCharts

Bottom line

All of these companies are growing at a reasonable rate though margins are struggling this year. CafePress Inc (NASDAQ:PRSS) appears to offer the most compelling valuation after the recent sell off and would make an ideal pairs trade with shorting Shutterfly, Inc. (NASDAQ:SFLY), as investors appear wildly ambitious about that stock.

With CafePress trading at only 12x forward earnings, the stock offers an intriguing valuation, especially compared to Shutterfly, Inc. (NASDAQ:SFLY) trading at 54x next year’s estimates. Are customized t-shirts that different from personal photo books? Both services offer incredible abilities to personally design and customize things, but any website could duplicate the service virtually overnight.

If CafePress Inc (NASDAQ:PRSS) can figure out how to tap into the designer base to create a long-term competitive advantage, it could create huge long-term value. For now the stock is a solid grower with potential for decent gains.

The article Buy CafePress and a Unique T-Shirt originally appeared on Fool.com and is written by Mark Holder.

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