Housevalues Inc.: Get In On the Bottom Floor

Mar.28.07 | About: Market Leader, (LEDR)

In case you haven't already loaded up on enough housing-related plays, Housevalues, Inc. (SOLD) is worth a strong look.

Housevalues provides web services to realtors and operates a number of real-estate related web sites. Their results have dipped along with the real estate market. 4th quarter revenues were down 15% over the previous year; some of that decline was related to their exit of the mortgage business, which failed to reach critical mass.

Revenue was also hurt as SOLD lost some customers, many of which left the bloated real-estate selling business. Overall, the company posted a small loss on the year due primarily to an asset writedown, versus $0.52 in EPS in 2005. Free cash flow remained positive in 2006, at about $0.14/share versus $0.65/share in 2005.

Longer term, the company remains well positioned for growth as the real estate industry migrates to the internet.

SOLD has been aggressively repurchasing shares, buying $11 million worth in 2006. At 12/31/06, the company had $3.12/share in cash net of debt (the stock closed at $5 today), which represents more than 60% of their current market value.

Disclosure: We own shares of Housevalues Inc.

SOLD 1-yr chart: