Vocus: One to Watch

From MSN:

Vocus, Inc. (VOCS) is a provider of on-demand software for public relations management. Its on-demand software addresses the functions of public relations, including media relations, news distribution and news monitoring. The Company delivers its solutions over the Internet using a secure, scalable application and system architecture. During the year ended December 31, 2006, the Company derived principally all of its revenues from subscription agreements and related services. The Company sells access to its on-demand software primarily through its direct sales channel, and to a lesser extent through third-party distributors. As of December 31, 2006, it had 1,727 active customers of all sizes across a variety of industries, including financial and insurance, technology, healthcare and pharmaceutical and retail and consumer products, as well as government agencies, not-for-profit organizations and educational institutions. On August 4, 2006, the Company acquired PRWeb International, Inc.

FUNDAMENTALS: Vocus is a small company that turned a profit for the first time last year and has just begun to emerge. Earnings have nearly quadrupled over the past year, rising from .03/share to .11/share in the latest quarter. Sales growth hasn't been as eye popping, but has been very consistent at around 50% quarter over quarter. The company has raised '07 estimates for both sales and earnings growth. Management owns a significant portion of the company and more institutions are beginning to initiate positions. All characteristics of a winner. If there is a negative, it's the poor margins and ROE. However, they are improving.

TECHNICAL: Typically, I try and feature stocks in this section that have just broken out or are hovering in a buyable range. Currently, neither is the case with VOCS. The company reported earnings yesterday and the stock gapped up with heavy volume to a new all time high and well above the 50 day moving average. Since breaking out of its first base since going public last year, VOCS has trended along the 50 day moving average with above average volatility, but with volume levels that indicate tremendous demand. That continues to be the case, but I would wait to catch it off the 50 day moving average or breaking out of a new base. A pullback in this market just may provide you with that opportunity. Put this one near the top of the watch list.

Disclosure: Author owns a small position in VOCS.

VOCS 1-yr chart: