A Backdoor $7 'Frankenstorm' Play With Great Growth Prospects

| About: Carbonite Inc. (CARB)
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The markets are closed today as the result of the fast approaching "Frankenstorm". Being the main story today, I think it is interesting to speculate on what stocks will be in the news as the result of the storm and might be possible plays. Home Depot (NYSE:HD) and Generac (NYSE:GNRC) are some of the obvious ones that could bounce.

However, I am thinking if I was a Carbonite (NASDAQ:CARB) marketing executive I would be planning a major marketing campaign in the Northeast using the storm to highlight the importance of personal data backup. I think there will be a lot of stories of homes destroyed, people displaced and other storm related damage in the days ahead. Carbonite is an "outside the box" back door play on the storm. More importantly, the stock is being buoyed by a better than expected earnings release last week and the company is experiencing rapid growth and has good prospects ahead.

Key highlights from Carbonite's recent earnings report:

  • The company reported an adjusted loss of 7 cents a share. This was much better than the consensus estimate calling for a loss of 18 cents a share and a huge improvement over the 47 cent per share loss in the same quarter last year.
  • Revenue for the quarter came in at $21.57mm, slightly better than the $21.42mm consensus estimate.
  • Company provided guidance for next quarter for a loss of 6 to 7 cents a share, significantly better than the loss of 11 cents share analysts had penciled in.

Carbonite, Inc. provides online backup solutions for consumers and small and medium sized businesses.

7 additional reasons CARB is a solid growth play at $7 a share:

  1. The company has approximately 35% of its market capitalization accounted for by the net cash (over $65mm) on its balance sheet.
  2. Consensus earnings estimates for both FY2012 and FY2013 had already shown improvement over the past three months. Look for this trend to continue to be positive based on this latest earnings report.
  3. The stock has now beat earnings estimates each of its five quarters as a public company. The average beat over consensus during that time period has been just under 30% a quarter.
  4. The company is tracking to just under 40% revenue growth in FY2012. Analysts have sales growing almost 30% in FY2013.
  5. Although the company is posting losses, Carbonite has been cash flow positive since 2011.
  6. The median price target by the three analysts that cover the stock is $14 a share. Price targets range from $8 to $15 a share.
  7. The stock IPOd just over a year ago at $16 a share and has had a steady slide since there. Insider stock lockups have now expired and with this earnings report, the stock could have quite possibly bottomed.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CARB over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.