ValueClick (VCLK) — This independent, small-cap provider of online and mobile advertising services began to buy back $225 million of its shares in the first half of 2013. S&P expects net margins to improve through 2015 relating to the benefits of acquisitions made in 2011, a divestiture in 2012, and discontinued operations this year. Though speculative, it views ValueClick as a potential acquisition candidate.
Consensus estimate are for earnings of $1.49 per share in 2013 and $1.85 in 2014. VCLK is trading at just 12.8 times next year’s earnings.
I first recommended this stock on Dec. 4, near $21, saying, “Following a decline from over $32 in May to under $19 in early November, VCLK reversed on several big-volume days. The dramatic reversal formed a double-bottom and a variation of an inverse head-and-shoulders formation with a neckline at $22. A break through $22 should provide a quick trade to $26.”
The stock met my expectations by breaking out from the inverse head-and-shoulders formation. Its trading target is still $26, so traders who bought the stock at lower prices should cover at that objective. However a major long-term bottom with significant upside potential appears to have formed. Thus, long-term investors may wish to hold or add to their positions since S&P has repeated the view that VCLK is an acquisition candidate.