Stamps.com, Inc. (NASDAQ:STMP)

Momentum Play. Looks like it's getting ready to pull out of the station here.

May have found a bottom as it bounces off the 10dma

Wow..STMP's chart looks parabolic. The company is profitable and mgmt just increased revenue guidance. However, it is due for a pull back, which may not happen so quickly due to the 15% short interest. I personally tried the service and did not feel it was worthwhile to keep paying for. Their advertising reminds me of AOL in the 1990s.

More commentary:
http://seekingalpha.com/article/303856-stamps-com-s-chart-looks-like-it-s-straight-from-the-dot-com-boom

This stock is great investment. Post offices will be out of business soon and this company will sky rocket

Anything related to the USPS must be bloated and bad....

looks like a market rocket.

dot.com has a shot

great stock

Small Cap Star

More and more people are looking for a way to do task at home.

I don't know, this seems like one of those little boring companies that you expect to go nowhere, but it does. I think with the recent pullback, we got a good value here and the stock should do well.

This company has a net income of around 11 million per year. There retained earnings shows a cumulative loss of 466 million. At this rate the company will take about 40 years to reach a break-even point. This company just doesn't seem like it is being managed well. Another thing that seems odd to me is 45 million spent on research and developement for 2007. That figure is up 50% from it's 2005 amount of 30 million yet their net income for 2005 and 2007 so almost no growth.

As the use of the Internet increases amongst the public, the demand for a home postage solution has risen... It will continue to increase over the next few years as word gets out. As a personal user of their product, I can highly recommend it. The amount of time saved in visiting the Post Office for stamps is very valuable.

Finally! I have seen something that makes me think this company has a chance. I went into Costco and there was a prominent display of Photostamp gift certificates.

The fundamentals of the company are strong, except for lack of revenue stream. Somehow the management believed that they were a household name and at the forefront of everyone's mind. WRONG!

This company needs to advertise to supplant the Post Office as the primary place to go to get stamps! At last they are doing some advertising in a place that will get them volume and product recognition. Now, we can see an upside to the 0 debt and good margins.

Weddings and Holidays - personalized stamps got to love it

With rising fuel costs this will become the most cost effective way to purchase stamps not to mention that the country is becoming more computer literate on a daily basis.

I believe this stock at its current price is an attractive entry point. They are relatively protected from competition and they offer a value added service that I believe has customer growth potential from some of the larger eBay sellers who would want to utilize their services to cut costs.

I am skeptical of how successful the customized postage stamps will be. The consumers who will be tech savvy enough to make custom stamps of their pets or kids will also be more likely to just e-mail information instead of snail mail.

BUT, there are plenty of old people around who don't trust e-mail, so those tech savvy individuals will still have to send snail mail to their parents and grandparents I suppose.

Just re-upping. Original pitch:

Nice FCF/Revenue, with good Net Margins, and Great Gross Margins. STMP has a clean and improving Balance Sheet with no debt. Consistent growth over the past few years, though sales growth stalled slightly last quarter. It's had a bad run the past few months, but should do better than the market over the next year with a PEG of .69.

Stamps.com

Two Key variables:

1. Low capital requirement (high return on capital). Stamps.com actually provides a software service to its customers. The PC stamp business does not require any material on STMP’s side.

2. Superior customer cost benefits in terms of both cost and convenience. Vast growth potential.

Summary

1. Large market opportunity ($65B US postage, 22M SOHOs)

2. Significant barriers to entry exist (USPS approval process 2.5 years)

3. Category leader in PC Postage and Customized Postage, 80-85% market-share.

4. Superior customer benefits at prices up to 80% less than meters

5. New market opportunity with PhotoStamps

6. Recurring revenue model with solid revenue growth, >40% last five years.

7. Leverable fixed cost.

Revenue and earnings growth in past 8 years.

1999 2000 2001 2002 2003 2004 2005 2006

Revenue 0.4 15.2 19.4 16.3 21.2 38.1 61.9 84.6

Earning -56.5 -209.6 -223.4 -6.8 -9.3 -3.7 10.4 16.5

yoy revenue growth 3700.00% 27.63% -15.98% 30.06% 79.72% 62.47% 36.67%

Growth drivers

1. Expand customer base.

2. Growth of photoStamps.

3. Adoption of multi-user product by larger businesses.

Conservative Accounting:

1. Advertising costs and promotional costs are expensed as occurred, although revenue is earned over the customer’s lifetime.

Under promise and over deliver:

2002 forecast for 2003:

Revenue 20 million

2003 actual result

Revenue 21.2 million

2003 forecast for 2004:

Revenue 28.6 million

Net loss: 8 million

2004 actual result:

Revenue 38.1 million

Net loss 4.7 million

2004 forecast for 2005:

Revenue 48.5 million

Net income $0.26/share

2005 actual result:

Revenue 61.9 million

Net income $0.44/share

2005 forecast for 2006:

Revenue 75-90 million

Net income 0.53-0.63/share

2006 actual result:

Revenue 84.6 million

Net income $0.69/share

2007 forecast for 2008

Revenue 87-97 million

Net income $0.77-0.87/share (including stock option expense)

Valuation:

Market cap: $295 million

Cash :$110

EV: $185

2006:

Revenue: 84 million

Cash Flow: $18 million

Cash: $110

2007:

Revenue: 95 million

Cash Flow: $21 million

Cash: $131

2008:

Revenue: 110 million

Cash Flow: $25 million

Cash: $156

Value = 20x$25m+$156m = $656m

Option on higher return of cash (acquisitions, share buy back).

2-3 year target Price: $30

PE

5/16/20007 price $13.5.

Cash per share =106m/23m=$4.6

2007 projected earning $0.80/share

2007 forward PE=$8.9/0.80 = 11

2007 IV:

Cash on hand = 106 m

(200 million NOL)

NPV of NOL = 70 m

EV = 295-106-70=119m

EV/FCF=6

Recapitalization Valuation:

Assume they used $110 mil in cash to buy back shares, and they could do it in one slug at today’s price of $13.50. They would buy 8.15 mil shares. They would have 13.77 mil shares remaining. They would lose the interest they are earning on their cash, so free cash flow would drop to around $14.8 mil. So FCF would be roughly $1 a share, meaning the biz would be trading at 13.5 times free cash flow, which is a good bit cheaper than the average market multiple. Let’s say sometime in 2 years they get a value of 18 times, and free cash flow doesn't grow at all. We would have an $18 stock, or about 35% total return.