Everybody's familiar with TheStreet.com; if you're into the stock market, you've definitely read, heard or watched co-founder Jim Cramer by now – he's even here on BloggingStocks. TheStreet.com has many other commentators, too, but c'mon, this is basically a one man show – and therein lies the risk. Then there's the potential for a bear market, which (as CNBC, owned by General Electric (NYSE: GE) has learned over the years) crushes profits. Wait a minute; I'm positive on this company, right? Yes. Here's the good news: this company has a lot going for it.
Revenue and profit growth have been steady in the mid-20% range, and the stock is fairly valued for that range. But TheStreet.com is also shifting its focus to take advantage of the interactive nature of the internet. In the coming months, it'll be launching a redesigned TheStreet.com (apparently, it's not even search engine optimized!), along with a new site, MainStreet.com. It also has been on an acquisition spree, buying Stockpickr.com (an interactive stock idea community with 125,000+ users) and Corsis (web marketing). Further acquisitions are guaranteed considering just last month the company more than doubled its near $40 million war chest by selling a minority stake to a private equity firm.
Those acquisitions will definitely help diversify its business away from just Cramer (sorry Jim), but what really excites me is the potential for online video content. Right now, this technology is in its infancy and everyone's experimenting (as evidenced by all the going ons at AOL, owned by Time Warner (NYSE: TWX), Google's (NASDAQ: GOOG) YouTube, MySpace, owned by News Corp (NYSE: NWS) and, more specifically, deals like this CNBC / Yahoo! (NASDAQ: YHOO) video deal and this one with IAC/InterActive Corp (NASDAQ: IACI).
TheStreet.com's new head of multimedia, Bill McCandless (he was one of the producers who let me bring models on CNBC), left CNBC for this position, so I'm not the only one who sees the potential. I really believe online video will be most helpful in selling products and subscriptions, aka TheStreet.com's core business. (I even closed my hedge fund to take advantage of this niche myself, trying to become Cramer 2.0 through my own enterprises.)
I could be wrong and advertising will be where the money is. If so, then TheStreet.com wins again because its current 6 million+ unique monthly visitors will surely be easy video converts and eventually worth quite a bit, especially considering the fact that CNBC pulls in $500 million annually! (which coincidentally is TheStreet.com's entire market cap.)
But it's the stock chart that's the icing on the cake. In early October, the stock broke out to a two-year high -- only by a $1 or so -- and until this month, the breakout was nothing to write home about. With Wednesday's breakout on the back of a 10% price surge, the nearly 5 million shares short must be shaking in their boots.
Long story short, I like the story and the chart. Do I own shares? No, this is a long-term investment and I have the patience of a ferret on crack. Instead, I present this as my first holiday gift to you. Happy holidays!
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, the star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund. He used to write for TheStreet.com.
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