CSI Tip: BUY DAEG

DAEG announced Q4 2014 earnings (quarter ended April 30, 2014) on June 17th. Revenues were $7.2 million down from $9.8 million last year. They actually made a profit of $.01 per share on a GAAP basis. On a Non-GAAP basis they made $.07 a share versus $.03 last year. Our valuation rose to $3.39 up from $3.25 last quarter. Gross margin inched over 70% and net debt came down to $7.2 million from $12.2 million a year ago. Looks like they may finally be turning the corner.

From their press release: “We are excited about our product offerings and opportunities and remain confident that we’ll demonstrate growth in the second half of calendar 2014.”

BUY

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CSI Tip: CBEY taken over this morning! Sell @ $9.85

CBEY got their take over offer this morning from Birch Communications at between $9.97 and $10 a share. While this is way below our valuation of $26.21 we generally don’t violate Rule #1—Take the money. We will book a 37.4% gain on this one.

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CSI Tip: BUY UNTD @ $10.28

United Online  Inc. (NASDAQ–UNTD)

Valuation-$$27.86
Price December March 12, 2014-$10.28

I planned to recommend UNTD a while ago. I purchased some for $9.57 a share, and then it went straight up to $15.88 on February 20th this year on a good revenue quarter. We sold half our position. But now it has come almost all the way back down and given that it is trading at 40% of our valuation, we think it is time to buy more. The last time we saw a company like this was AOL in the mid-teens. Everyone thought AOL was dead. Now it is over $40 a share. UNTD is also one of the remaining early internet pioneers with brands like Classmates, NetZero and Juno.

Trading at only 37% of our valuation and with 50% of its market cap in cash ($5.06 a share) we think this is a BUY.

Their latest quarterly results were the first ones since UNTD spun off FTD last year, but they were still impacted on the expense side by spin-off costs. Revenues were $62.6 million (which drove the stock to its high) and after adjusting for litigation, transaction, share based compensation, intangible amortization, depreciation etc. they made $12.6 million. For 2014 they are projecting OIBDA of $28-$34 million.
There are about 14 million shares outstanding and it trades about 600,000 shares a day.
About UNTD:

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