Intersections, Inc. (NASDAQ:INTX)

CAPS Rating: 3 out of 5

The Company offers consumers a variety of consumer protection services and other consumer products and services on a subscription basis.

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Member Avatar jed71 (88.57) Submitted: 10/6/2014 5:00:57 PM : Outperform Start Price: $3.95 INTX Score: -7.47

It’s really tough for me to put a green thumb on a stock with the market at these current levels. Frankly, I have been looking for a flyer to place on my caps portfolio for a few months, and have had very little success finding one I am comfortable with (I know others will argue with me about lots of opportunities out there, but I just don’t see it that way with the DOW at 17,000+). So here is my wild shot at a flyer. As I see it, there are two possibilities here: either it tanks down into the sub $1 range and the shorts are correct (there are 3.9MM shares short, or about 21% of float) or the insiders and institutional investors who are scooping up shares are correct and this is going to become a 3-4 bagger by 2016.

There have been some recent “insider” purchases down at these levels. Osmium Partners, a firm which I have followed in the past, has scooped up an additional 660K shares in the past month at a price range of $3-4 a share. They now hold 2.75MM shares and I don’t see any sells by the firm back through 2013. I am also seeing where another director (I think one the founders) is holding an additional 7MM shares. And the CEO has another 1MM or so shares. So insiders and their big institutional investor control 53% of the outstanding shares, and this is not including the other directors and officers. That’s a pretty large number of shares under their control. I like the fact they are continuing to buy at these levels.

A bit about the firm: “Intersections Inc. (Intersections) is a provider of subscription based consumer protection services. Its services help consumers protect themselves against identity theft or fraud and understand and monitor their credit profiles and other personal information. It also offers subscription based insurance and membership services. The Company operates in three segments: consumer products and services segment, which, includes its identity theft protection and credit information management, data breach response, and insurance and membership products and services; online brand protection segment, which includes the corporate brand protection and business intelligence services provided by its subsidiary net enforcers and bail bonds industry solutions segment includes the software management solutions for the bail bond industry provided by its subsidiary captira analytical. Its consumer services are offered through relationships with clients, including the financial institutions.”

So they look to be a direct competitor with LOCK (Lifelock). If you want a good laugh, compare the insider buyer / selling between LOCK and INTX. Polar opposites. While I know some will disagree with me, I believe the industry will be going through a growth spurt over the next few years due to the high public awareness of the identity incidents of the recent past. There have been major brokerage and large consumer entities that have experienced major breaches of consumer information, and sometimes credit card and banking information. The issue of identity and protecting one’s financial health has become all too real. While I think LOCK is probably on the overvalued side, I think INTX is quite undervalued at this range.

I am seeing roughly $0.67 per share in cash. They had a pretty big dividend up until recently and it looks like it has been halted (probably to conserve cash). I can’t blame them, the share price definitely was not benefiting from the dividend. The balance sheet is ok – but nothing I can call stellar. They are trading at about 0.80 book value, which I like. Their sales channel for the institutional product placement of their Identity Guard ™ products, however, seems to have dried up. From the 10-Q:

“The decrease in revenue continues to be primarily due to a reduction in new subscribers as a result of the decisions by our financial institution clients to continue to halt, reduce or delay marketing. Financial institutions have ceased or significantly decreased their marketing of add-on or ancillary products, including our products, which we believe to be due at least in part to increased regulatory scrutiny of financial institution marketing of add-on products.”

If it looks like this is bad news to you, I would tend to agree. I said this was a flyer, and I wasn’t kidding. I am not as negative about the loss of the institutional firms, such as Capital One, whose marketing practices I don’t particularly care for. The firm seems to be headed in a more direct-to-consumers type of marketing effort, which will wean them from reliance on these financial institutions which have provided much of their customer base in the past. This doesn’t happen overnight. Changing the channels in which your firm sells business is a tough proposition and sometimes takes a significant amount of time.

Maybe I am wrong to rely on this, but the sales estimates coming from management actually look really good for 2015 and 2016. The company is guiding revenue growth somewhere between 50-90% over the next 2 years. Those are some huge numbers. Back of the envelope, if they come pretty close to the low end of this growth estimate, they are going to be throwing off some huge earnings into 2016. They also have a new pet health monitoring business which is ramping up for sales to begin by the end of 2014 (if you don’t think this business will do well, please see the recent online survey of how many people call home and leave messages for their pets while they are on vacation – and the other whacky things pet owners do for their pets). I am taking a shot here because it’s close to a 5-year low and the chart seems to be showing a bit of support. I think this bottom is actually going to give me some good protection to the downside – but I guess we will see. This has also got to be a target for other identity companies – a buy out would not surprise me at all. Green thumb for now, unless something changes substantially.

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Member Avatar dj2000a (84.01) Submitted: 6/20/2014 11:32:19 AM : Outperform Start Price: $4.47 INTX Score: -18.94

Somebody will buy them, probably LOCK.

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Member Avatar chris293 (86.64) Submitted: 1/28/2014 2:32:11 AM : Underperform Start Price: $7.55 INTX Score: +64.83

What is holding this company up?

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Member Avatar RumbachStock (33.79) Submitted: 4/27/2013 12:58:50 PM : Outperform Start Price: $8.73 INTX Score: -85.94

Consistent cash flow, all debt paid off, nice dividend. Seems undervalued.

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Member Avatar kulls81 (< 20) Submitted: 11/29/2012 1:06:11 PM : Outperform Start Price: $8.04 INTX Score: -97.47

Magic Formula 11-29-12

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Member Avatar rs10s (37.61) Submitted: 12/5/2007 12:34:35 AM : Outperform Start Price: $6.65 INTX Score: -88.17

In case anyone hasn't noticed credit theft, identity theft will and is growing as more people use their credit cards for purchases. We'll all need to watch our credit and get help if something bad happens. Solid long term play.

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Member Avatar gorkam (< 20) Submitted: 2/4/2007 10:05:58 PM : Outperform Start Price: $8.59 INTX Score: -106.56

i see this in future is needed!

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Member Avatar Bullerina (71.84) Submitted: 1/11/2007 1:25:13 AM : Outperform Start Price: $8.08 INTX Score: -107.07

Looks like a decent pick to me.

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Member Avatar rogerz44 (77.43) Submitted: 1/10/2007 5:18:57 PM : Outperform Start Price: $8.08 INTX Score: -107.07

Growing need for ID theft protection

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Member Avatar Telke (71.90) Submitted: 12/28/2006 2:51:44 PM : Outperform Start Price: $7.75 INTX Score: -104.13

High growth. Low price.

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Member Avatar 5STARsmallCAPS (< 20) Submitted: 11/11/2006 10:42:06 AM : Outperform Start Price: $7.31 INTX Score: -105.83

5-star $177 million market cap on 11/11/06
Identity theft protection and credit management services.
5STARsmallCAPS picks five star stocks with the smallest market caps.

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Member Avatar dandaman36 (77.03) Submitted: 10/12/2006 12:01:32 PM : Outperform Start Price: $6.42 INTX Score: -100.66

INTX is a solid business with safe clients, growing assets and liabilities that have decreased by 50% in the past 2 years.

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