Seeking Alpha

Sujan Lahiri's  Instablog

Sujan Lahiri
Send Message
I'm an independent stock researcher, writer and investor based in Amsterdam. My primary focus is on the small-cap segment of the market. My next expertise is online marketing; SEO, SEA and Google Analytics. I also enjoy soccer, sports in general and campaigning for a libertarian minded political... More
My blog:
Sujan Stock Picks
  • You Might Consider Buying Inuvo 18 comments
    Mar 26, 2014 12:18 PM | about stocks: INUV

    I recently bought shares of Inuvo (NYSEMKT:INUV), a virtually unknown and severely undervalued internet marketing company. Here's why:

    Number 1: Inuvo is dramatically undervalued compared to peers

    There is no logical reason why Inuvo is so undervalued, except for Wall Street's ability to severely misprice micro-caps.

    Number 2: Inuvo is a cash-growing and profitable enterprise

    Inuvo makes a profit, generates cash, grows revenue and is fully compliant with the strict NYSE listing rules. This is a rare phenomenon among small internet companies. It makes Inuvo a much safer investment than some loss-incurring pinksheet stock.

    Number 3: The industry they operate in is very big, and about to become much bigger

    Inuvo operates in the internet marketing industry, which is a $50 billion opportunity. The growth is all but over; online advertising, paid search, etc, are still in its infancy stages according to many experts.

    Number 4: Inuvo is an obvious take-over target

    Inuvo has a novel product portfolio and technology in place that could be very interesting for competitors to acquire, like the ALOT advertisement bars and validclick.com. And given Inuvo's extreme undervaluation, it would not surprise us if a bigger marketing firm would make a bid on Inuvo in the near future. Think about it, they could buy $55 million in profitable revenue for less than $25 million (!).

    Number 5: Chart indicates compelling buying opportunity

    (click to enlarge)

    Number 6: Insiders are deeply invested at current levels

    Check out the insider transactions history, and you will notice insiders bought heavily at current levels. Remember, insider buying is an excellent buy indicator, especially if you have the opportunity to establish a long position at the same levels they did.

    So in essence, if you're looking for a cheap micro-cap to add to your portfolio, you might consider buying shares of Inuvo as well. Do your own due diligence, and good luck investing.

    Disclosure: I am long INUV.

    Stocks: INUV
Back To Sujan Lahiri's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (18)
Track new comments
  • microman
    , contributor
    Comments (37) | Send Message
     
    Do yo have a 12-month target in mind?
    26 Mar, 12:26 PM Reply Like
  • DANIELTHECHAMP
    , contributor
    Comments (46) | Send Message
     
    Picked up...Looks like a good company!
    26 Mar, 01:15 PM Reply Like
  • The Sceptic
    , contributor
    Comments (59) | Send Message
     
    Sujan - Do you know why the stock spiked to $5 back in 2010?
    26 Mar, 04:24 PM Reply Like
  • chollangi
    , contributor
    Comments (3) | Send Message
     
    This company is yet another velti. This company should find an umbrella(take-over) to survive. Else $0.
    26 Mar, 07:20 PM Reply Like
  • Pat256
    , contributor
    Comment (1) | Send Message
     
    Why did the stock tank today?
    26 Mar, 07:32 PM Reply Like
  • fpan3
    , contributor
    Comments (4) | Send Message
     
    Sujan How long do you plan to hold this stock ?
    26 Mar, 09:25 PM Reply Like
  • skysteve
    , contributor
    Comments (9) | Send Message
     
    Sujan,
    Are you going to have an article published on Inuvo in the near future?
    26 Mar, 09:39 PM Reply Like
  • callan_2
    , contributor
    Comments (3) | Send Message
     
    Loading up!
    26 Mar, 11:29 PM Reply Like
  • investor9455
    , contributor
    Comment (1) | Send Message
     
    Thanks for the article. Going Long!
    27 Mar, 03:07 AM Reply Like
  • Sujan Lahiri
    , contributor
    Comments (73) | Send Message
     
    Author’s reply » @microman: I don't have a specific target, but shares could easily double.
    @the sceptic: Could be anything. Can't find headlines dating that far back.
    @fpan3: No specific timeline, depends on what shares will do.
    @skysteve: No I don't. Just wanted to briefly share my thoughts on Inuvo.
    27 Mar, 05:04 AM Reply Like
  • fdexter
    , contributor
    Comments (11) | Send Message
     
    hmm.....something's up with this stock.
    30 Mar, 10:21 PM Reply Like
  • Chris5412
    , contributor
    Comment (1) | Send Message
     
    How come it keeps decreasing these days? Still can buy, Sujan?
    Thanks^^
    31 Mar, 09:50 PM Reply Like
  • Toby T
    , contributor
    Comment (1) | Send Message
     
    Here's some comments on the 2013 financial statements:

     

    1) They are shifting away from core revenue producing "owned and operated" ad serving to "partner network" ad serving. Although they grew their partner segment by $10 million in 2013, that only resulted in a $4 million gross profit while "owned & operated" decreased by $8 million in revenue and decreased profit by $5 million. Owned and operated is more profitable, and they state that they are shifting away from it.

     

    2) Their "net income" came from a combination of deferred tax liability/credit ($300k) and income from discontinuing operations ($500k). They also shaved $4 million off of marketing costs and of "Selling G & A" expenses. That translates to me in firing your sales team and reducing marketing in favor of outsourcing to partner networks that are overall less profitable.

     

    3) With "alot.com" they are competing with huge brands that have much better content/writers and well established business models, including: about.com, cnet.com, yahoo.com, usatoday.com etc. The list of "content" sites goes on and on... Look at Yahoo's historical problems with being a content portal with serving ads and tell me it is wise to enter that market now.

     

    I like the idea of a takeover target, and that could be a possibility, but I'm not too sure about their growth prospects considering they are shifting away from higher profitability endeavors and trying to go into the well established content market. It will be a race to see if they can grow their partner network faster than their "owned and operated" segment is dying. I'll put it on my watch list though...
    2 Apr, 02:29 AM Reply Like
  • ValueHunter109
    , contributor
    Comments (4) | Send Message
     
    Toby,

     

    I believe they are headed in the right direction.

     

    The SG&A expense decrease of $3.6M is mainly attributed to the move to Arkansas from New York, with the tax incentive making up only 400k of that amount.

     

    Also, you're contradicting yourself in points 1 and 3. The ALOT brand is part of the Owned and Operated segment. So, I don't think they are "firing their marketing team", but rather it's a shift in focus to their new ALOT brand and mobile because that's where they see future profitability. They state that marketing spend will be increased to fuel these initiatives. I would view the dip in the segment as temporary.

     

    I see nothing bad about the growth in the Partner Network segment, with a 29% increase in cost for a 39% increase in revenue.
    3 Apr, 06:02 PM Reply Like
  • XJ37
    , contributor
    Comment (1) | Send Message
     
    Nice consistent downward trend...Going to short this to 50 cents
    3 Apr, 11:36 PM Reply Like
  • toneroner
    , contributor
    Comments (101) | Send Message
     
    I tried to do some DD but for a web business don't you think they should link some of these apps and have some testimonials? Or at least some tutorials? I understand its their corporate site but without seeing how they generate revenue makes me not want to invest
    11 Apr, 11:02 AM Reply Like
  • ocls_pk
    , contributor
    Comments (79) | Send Message
     
    http://bit.ly/1mG8d7j.

     

    Seems to me earning are good. EPS of 3 cents. Profitable quarter. Any guesses on how high this will go?
    25 Apr, 01:24 AM Reply Like
  • Sujan Lahiri
    , contributor
    Comments (73) | Send Message
     
    Author’s reply » Earnings were certainly good, the share price jumped in a very down market. Inuvo could easily break through the $1, especially if they stay profitable and manage to further execute their new strategy.
    29 Apr, 09:56 AM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.