TheStreet.com, Inc. (TSCM)

sleepyseth (96.89) Submitted: 10/31/06 2:45 PM : Start Price: $8.93 TSCM Score: -28.35

Thestreet.com is a fledgling financial/internet powerhouse. Jim Cramer is a fantastic promoter, similar to a Howerd Stern or Donald Trump, maybe not as much though. His fans are borderline rabid and follow his advice with their eyeballs and money. The stock was completely oversold after they announced a quarter, which in my opinion was fairly strong. It did not beat expectations, but only met expectations (which had been increased multiple times) of earnings growth of 93% and revenue growth of 58%. Meeting these tremendous estimates was enough to chop off 30% from the price of the already somewhat inexpensive stock. The stock now trades at a trailing PE of 23 and a future PE of only about 15. For a company growing so fast, the valuation simply makes no sense. Colgate is recently beat estimates of negative growth, yet the market bumped up the steadily rising shares even further to a new 52 week high and a PE of about 27. This is just one example of the recent odd discrepancies in the market. Granted Colgate is a safe steady company that allways beats earnings and has a well established brand, but I would much rather have a less stable company, with a rapidly growing brand at 15 times future earnings, growing at 50%, than a very steady one growing less than 10% and trading for 20 times next years earnings. Reviewing past performance for this company shows that the third quarter is generally slightly weaker than the second quarter. They earned 12 cents in the second quarter and 11 cents in this quarter, keeping in line with their historic trend. Even with the slight earnings pull back every third quarter from the second, this company still shows very good year over year growth every quarter. TSCM was hurt by the fact that they did not really see paid subscriber growth this quarter. I believe that this is just a minor setback this quarter, and the fact that they still met the estimates, shows the strength of the company in all of its other areas. The company recently aquired Weiss Ratings for under $5 million and has since begun offering free stock ratings on their website. This should help to greatly increase their visitors and helps bring them closer to their goal of being a one stop shop. This stock does still hold the risk that any company with a very public personality behind it has. The risk that something negative could happen to Jim Cramer. Something like a scandal, which I find unlinkely, or maybe a heart attack, which seems more likely given his frenetic pace on his show. The loss of Jim Cramer would be severely detrimental to the company, but I am betting on Cramer sticking around for a long time. Thestreet.com is Jim's baby, he has a large stake in it and will most likely do all he can to help it succeed.

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