It is amazing how many cheap stocks are present in this market for investors willing to expand their research to the small cap universe. This is an area that can provide legions of underfollowed stocks, where an investor can find some real gems. One undervalued cash rich stock that looks like it has hit a long term technical bottom is below.
"Marchex (MCHX) operates as a digital call advertising and small business marketing company primarily in the United States. Its products, services, and technologies enable advertisers to reach consumers through mobile, online, and offline sources." (Business description from Yahoo Finance)
7 reasons MCHX is at bargain at just under $4 a share:
- The stock is selling near the bottom of its historical valuation range based on P/B, P/S and P/CF.
- The company has over $40mm in net cash on the books (around 30% of market capitalization)
- The median price target held by the 6 analysts that follow the stock is $7.50 a share.
- Several insiders made some small purchases in May.
- Marchex is dirt cheap at just 78% of book value and just 6 times operating cash flow. The company just added 1mm shares to a stock repurchase program in May as well.
- The company has partnerships with Sprint (S), Verizon (VZ) and AT&T (T) among other carriers and mobile developers. Its small capitalization (under $100mm after net cash is striped out), myriad relationships with advertisers and technology platform could make it a buyout target at some point in the future.
- The stock has long term technical support at this level and MCHX was over $10 a share less than a year ago (See Chart)