IAC/InterActiveCorp (IACI) is one of those under the radar tech/media stocks that does not get nearly enough attention from investors for its top quality assets and growth prospects. It operates the leading online dating site in Match.com and also the search engine Ask.com among other online properties. Both businesses are showing impressive revenue and income growth. It also owns Urbanspoon, a solid rival to Yelp.com (YELP) and OpenTable (OPEN) in the dining review/capability arena. The company has very solid growth prospects and is selling at reasonable valuations. It belongs in growth orientated portfolios.
7 reasons IACI makes sense for growth investors at under $47 a share:
- The company has a robust balance sheet with almost $700mm in net cash on the books, which represents over 15% of market capitalization at current price levels.
- Consensus earnings estimates for both FY2012 and FY2013 have increased nicely over the past three months.
- The stock is selling near the bottom of its five year valuation range based on P/S, P/E and P/CF.
- The company has easily beat earnings estimates for five straight quarters. The average beat over consensus quarterly earnings estimates during that time period has averaged approximately 30%.
- The twelve analysts that cover the stock have a median price target of $58 a share on IACI as does Credit Suisse as well an "outperform" rating on the stock. Benchmark upgraded the shares to a "Buy" in May.
- IACI sells for around 10 times operating cash flow and under 14 times forward earnings which is a discount to its five year average (21.4).
- It has some short term technical support at just under current price levels (see chart).
Disclosure: I am long IACI.