What goes up must come down? All too often that occurs in equities markets. I will look now at five stocks that have seen substantial run ups. Which among them will have equally steep pullbacks? Read on.
Ancestry.com, Inc. (ACOM) is listed on Nasdaq, and was trading recently at about $24.50 per share, near the low end of its 52 week range from $45.79 to $20.69. It has a market capitalization of just over $1 billion, and a trailing P/E ratio of 21. It pays no dividend.
As recently as August, 2011, shares of ACOM were trading in the mid 40s. What has happened since then is a realization that ACOM is no longer a high growth, start up company. The surest sign of that is that management has recently undertaken a $50 million dollar share buy back. True growth companies plow earnings back to fund the growth. Stock buybacks occur when management has no more viable use for capital than to spend it on shareholder value.
ACOM had a solid third quarter in 2011. Its revenues were up 30 % year over year, and profits were $0.40 per share, compared with a year ago’s $0.24 per share. This revenue growth was fueled by increased marketing, and a lower “churn” rate, both signs of a maturing company. No longer as small and mercurial as classic “.coms,” ACOM’s stock may already have seen its worst days, and I believe it suitable for further investigation as an intermediate, growth and value play. To continue reading, click here