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I’ll give you 3 hints:

1. This stock is trading at a 52-week high;

2. The company is profitable;

3. The company operates dozens of websites and sells software that powers hundreds more.

Introducing Internet Brands (INET):

inet

You probably know its ticker symbol – INET – from the days when Instinet was a publicly traded company. But now INET stands for Internet Brands, which owns all of these websites:

Automotive

6SpeedOnline.com

AcuraZine.com

ATVConnection.com

AudiForums.com

AudiWorld.com

Autos.com

CarsDirect.com

CivicForums.com

ClubLexus.com

CorvetteForum.com

DodgeForum.com

evolutionM.net

F150Online.com

Ford-Trucks.com

g35Driver.com

HDForums.com

HondaMarketPlace.com

Honda-Tech.com

LS1Tech.com

Maxima.org

MBWorld.org

MustangForums.com

My350Z.com

PassionFord.com

Rennlist.com

RX7club.com

RX8club.com

ScoobyNet.com

SellMyCar.com

ThirdGen.org

WikiCars.org

Yota-Tech.com

Careers

AirlinePilotForums.com

CVTips.com

GrooveJob.com

HospitalJobsOnline.com

iFreelance.com

ModelMayhem.com

NursingJobs.org

PPRuNe.org

WAHM.com

Health

3FatChicks.com

FitDay.com

I-Am-Pregnant.com

Home-Related

ApartmentRatings.com

Craftster.org

DavesGarden.com

DoItYourself.com

Epodunk.com

Gardens.com

OhMyApartment.com

RealEstateABC.com

Splitcoaststampers.com

ThatRentalSite.com

Money and Business

BusinessMart.com

FinWeb.com

CreditorWeb.com

BrokerOutpost.com

Loan.com

Mortgage101.com

SmallBusinessNotes.com

Shopping

AVRev.com

Bargainist.com

BensBargains.net

Boddit.com

Deallocker.com

HighDefDigest.com

HighDefForum.com

OutBlush.com

Steves-digicams.com

UltimateCoupons.com

WirelessForums.org

Travel and Leisure

BBOnline.com

BikeForums.net

BritishExpats.com

CruiseMates.com

CruiseReviews.com

DVDTalk.com

EquineHits.com

FamilyCorner.com

FlyerTalk.com

Horsetopia.com

HuntingNet.com

KidsCamps.com

MySummerCamps.com

PuppyDogWeb.com

RCTech.net

SlowTrav.com

TheHullTruth.com

TheNewPartentsGuide.com

TrekEarth.com

TrekLens.com

TrekNature.com

VacationTimeShareRentals.com

VetInfo.com

WikiTravel.org

World66.com

That’s a serious collection, generating over 55 million unique visitors and over 700 million page views in January 2010, according to the company. More than 97% of traffic is from nonpaid sources. These consumer sites generate a little over 2/3 of INET’s revenues, primarily through cost-per-thousand [CPM], cost-per-lead [CPL], cost-per-action [CPA], and cost-per-click [CPC] advertising. Internet Brands just might be the world’s most successful affiliate marketer.

INET’s remaining revenues come from selling vBulletin software, the leading solution for web-hosted forums, and AutoData, a series of solutions for automobile dealers.

Between these operations, Internet Brands made $.28 per share ($.27 fully diluted) on just under $100M in revenues.

A few problems

I’m long INET, but there are a few things that give me pause.

  • Revenues dropped year-over-year. That’s not a good trend, especially because the company bought a number of web properties last year. It looks like the consumer automotive sites were the culprit, with CPA and CPL payments from auto dealers down over $13M year-over-year. Not surprising given the environment.
  • Dual shareholder classes adversely affect public shareholders. Idealab’s Class B shares control over 60% of the vote.
  • There is an overhang of locked up shares that will be eligible for resale in the coming months.

Bottom line

Though not an overwhelming value, Internet Brands has a lot of promise and appears to be executing well. It’s scale is unique among aggregators of small content sites, and should help it attract larger advertisers and improve search engine optimization. As long as Internet Brands’ stock keeps chugging along, it will have a place in my portfolio.

DISCLOSURE: Long INET.

Source: The Number One Internet Stock You've Never Heard Of