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For almost 7 months, I have been touting MAIL as a stock to own. It has now crossed the $10 barrier (with another 2.5% move after hours on Friday) , reflecting a $90MM market cap. It is useful to discuss why the stock has moved and reevaluate targets here.

The stock has moved in the last two weeks approximately 25%. Why?

1. The stock has begun to interest institutions, particularly in Israel since it is safely above $5 per share and the volumes have increased. Whereas at the beginning of 2009, IncrediMail (MAIL) traded about 10,000 shares on a good day, its 3 month average trading volume is now 80,000 shares a day according to Yahoo Finance.

2. Investors have woken up to the fact that there is almost $3 per share in cash in the company so the enterprise value is only $60MM and that the company is safely ahead of its revised projections of $9MM in operating income this year. MAIL did $5.6 in Operating income in the first half of 2009. That is a ~6X multiple for a company growing very rapidly and generating a lot of cash.

3. Incredimail has shown a willingness to pay a dividend. If they repeat the dividend of earlier this year of 50 cents per share that is still a 5% yield which is better than you can get in bonds or anywhere else.

4. Most importantly, I think investors believe that CPCs at Google (NASDAQ:GOOG) have stabilized and will likely head north as we move into the 4th quarter and Christmas shopping season. The lower CPCs keep down earnings at MAIL and other Google partners. This also explains the almost 15% rise in Google's stock over the last 50 days.

5. The release of the 2.0 mail product announced last week, should both increase searches (as I assume it was designed with the new business model in mind) plus increase virtual item pack sales.

So where to from here? When I initially bought the stock, I had a $9 target in mind. After the revised earnings projections, I revised my thinking to $12 as a price target. I am now thinking that $15 is certainly within reach if the GOOG CPCs have in fact stabilized and institutions are on board and buying this tightly held stock.

There is also one wildcard here in my opinion (outside of the economy and a giant market fall): IACI. MAIL is a perfect (and accretive fit) for IAC's Smiley Central business. IACI can also afford to pay more for it since it has a better revenue split with GOOG.

Full Disclosure: Long MAIL