The luckier I get in my stock picking the more people imagine I have some inside information. Not so, just a lot of effort and study of what works over the long haul. On Monday I wrote Chasing Value: Bear Stearns - cheap and growing and afterward in discussing the post with colleagues it occurred to me that Bear Stearns at $154 per share was a bit steep for investors with less capital or people wanting to invest for kids. So I decided to take a look at something easier to swallow.
I ran a stock screen with some very basic criteria and came up with 29 companies. I took out the financial institutions, and the riskier stocks and came up with three possibilities using the following criteria ranges:
- Price range: $5 to 15
- Price/Sales: 1.0 to 2.0
- Price/Book: 0.0 to 4.0
- Yield: 1% to 3%
- P/E Ratio: 10 to 25
After running the screen and doing some review I selected three stocks. But after further review this morning I cut two of them for low trading volume and low capitalization. That left me with only one: InfoUSA (NASDAQ: IUSA).
Company Profile: Huddled masses yearning for information can immigrate to infoUSA. The company is a leading provider of business and consumer inforrmation and research services for direct marketing, sales prospecting, and business intelligence. Through its infoUSA Data Group, infoUSA has 12 databases with contact and credit information covering some 15 million businesses in the U.S. and Canada. The Data Group also includes Web-based information firm OneSource Information Services. The company licenses its data to third parties such as Google, Yahoo!, and AOL. Chairman and CEO Vinod Gupta owns more than 35% of the company.
The P/S, P/B and P/CF are very solid. Something that would hold up against any of my large and mid-cap picks. I do not think investor supreme Warren Buffett would have any interest in a company like this because it is too small and does not make something you can touch. However we live in the "idea age" and this company has good ideas.
- Price-to-sales ratio P/S: 1.29
- Price-to-book ratio - P/B: 2.41
- Price-to-cash-flow - P/CF: 8.76
The Dividend yield is a lot higher than average and is surprising from this type of company. The P/E ratio is about average and is not what draws me to the stock, but in light of all the other data It seems worthy of consideration.
- Dividend Yield: 2.38%
- Price-to-earnings ratio - P/E: 16.95
InfoUSA has noteworthy clients and experienced management with a large stake in the company. While Mr. Buffett might not be interested in this stock, someone like Barry Diller, CEO of InterActiveCorp (NASDAQ: IACI) might be, and I am for certain.
I like this one from many perspectives: It is in a growing industry. It might one day be a takeover target. And it's at a stock price point that smaller investors or kids can manage. I'm always interested in what my readers think. I have only been pondering this one for 24 hours so I would like to hear anything anyone else has to offer.
If you are interested in long-term value investing, you should read Chasing Value and put it on your toolbar.
Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out my other posts for BloggingStocks here.
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Reader Comments (Page 1 of 1)
4-23-2007 @ 3:53AM
navin said...
mail me the current market condition