Benny's Stock of the Day -- J2 Global Communications

[BadBoyBenny]

Who are they?

From Yahoo Finance

[ QUOTE ]
j2 Global Communications, Inc. provides outsourced and value-added messaging and communications services worldwide. It offers faxing and voicemail solutions; document management solutions; hosted email, email perimeter protection, and email marketing services; call management; and conference calling services. The company also offers integrated solutions to replace or augment individual and corporate messaging and communications services. As of April 19, 2005, j2 Global Communications delivered its services through its global telephony/Internet protocol network that covered approximately 1,500 cities in 22 countries across 5 continents. The company serves individuals, small to medium-sized businesses, enterprises, and government organizations. j2 Global Communications was co-founded by Jaye Muller and Jack Riley in 1995. The company is headquartered in Hollywood, California.

[/ QUOTE ]

Form their last 10-Q

[ QUOTE ]
Our core services include fax, voicemail, email, call management and conference calling and a bundled suite of these services. These are business services that make our customers more efficient, more mobile, more cost-effective and more secure than traditional alternatives. We generate substantially all of our revenue from subscribers that pay activation, subscription and usage fees. We also generate revenue from advertising and revenue share on premium rate DIDs issued to non-paid subscribers (sometimes referred to as “Free” subscribers). Of the more than 9.0 million telephone numbers (or DIDs) deployed as of March 31, 2005, approximately 598,000 were serving paying subscribers, with the balance deployed to Free subscribers.

[/ QUOTE ]


Some numbers I like about the business

High margins
Virtually no debt
High growth
Reasonable valuations

Note that they have had very consistent growth throughout the short life of the company. The income statement shows a dip in earning from 03 to 04 but that was because they did not have to pay taxes prior to 2004 due to losses incurred when the company was starting up.

A lot of their past growth was through acquisitions, which can bother some people, but they were paid for by cash from operations and not debt. They also seem to have been synergistic with their previous operations as the acquisitions were for complimentary products that they now offer as part of a product suite (eFax is the biggest by far).

I don’t know who their direct competitors are, but if the only ones are the ones that yahoo lists, they are the most profitable and the biggest player.

There seems to be a decent amount of people selling this on short, I haven’t yet heard a case why based on business fundamentals or valuation. Can someone who knows something about technical analysis explain if there is a technical reason this would be sold short? There are less short shares outstanding this month than last month though.

Other financial statistics

EV/FCF
23.8

PEG – expected 5 year
0.65

ROE
27.6%

Disclaimer: I own shares of this stock in my Ameritrade account. I posted it on this forum a long time ago but can’t seem to find it with the search function.

[James Boston]

It doesn't excite me to see that over 1 million shares have been sold by insiders as of late.

[AceHigh]

I assume this is JCOM.

How big will the tax bite be in 2005? Lots of growth, might be a bargain because 2003 was an aberation and made 2004 look bad, so that could explain why it is cheap.

If income is back in line with revenue for 2005, it looks very good.

Earnings report due on 7/25, did price drop with earnings news in March?

[BadBoyBenny]

[ QUOTE ]
How big will the tax bite be in 2005? Lots of growth, might be a bargain because 2003 was an aberation and made 2004 look bad, so that could explain why it is cheap.

[/ QUOTE ]

I assume the tac bite will be about the same on earning s as '04 dollar for dollar. The thing is they grow revenues at 40% year over year, and gross margins will only go down as their infrastructure gets large. There may be more SG&A if they feel pressure to meet the high revenue growth forecasts, but that is a risk with any company.


From March-7

The stock dropped in late March, but earnings weren't that bad. Maybe someone else knows why.

[ QUOTE ]
Shares of J2 Global Communications (JCOM:Nasdaq - commentary - research) rose 1.6% after the company, which provides messaging and communications services, reaffirmed its first-quarter and 2005 financial guidance. On Feb. 3 the company said that it expects first-quarter earnings of 39 cents a share on sales of $32.2 million. Analysts are expecting earnings of 39 cents a share on sales of $32.2 million. For all of 2005, J2 Global said that it would earn $1.70 to $1.75 a share on sales of $145 million to $148 million. Analysts are expecting earnings of $1.76 a share on sales of $146.7 million. Shares traded up 66 cents to $41.62.

[/ QUOTE ]

[AceHigh]

[ QUOTE ]
The stock dropped in late March, but earnings weren't that bad. Maybe someone else knows why.

[/ QUOTE ]

The whole market tumbled in late March, early April, that might be why. Company looks good, I like 40% growth, I will do more research, but so far looks very good.

[BadBoyBenny]

[ QUOTE ]

J2 Global Comm quarterly profit rises 57% (5:39 PM ET) SAN FRANCISCO (MarketWatch) -- J2 Global Communications Inc. (JCOM)after Monday's closing bell reported second-quarter net earnings of $11.7 million, or 46 cents a share, up 57% from $7.5 million, or 29 cents a share, last year. Revenue at the Los Angeles-based company was $34.9 million, compared with $25.8 million last year. J2 also forecast third-quarter earnings of 48 cents to 49 cents a share on revenue of $37.4 to $38 million. The company raised its earnings outlook for the year, forecasting a per-share profit in the range of $1.82 to $1.87 on revenue of $145 million to $148 million. J2 had previously forecast 2005 earnings in the range of $1.70 to $1.75 a share.

[/ QUOTE ]

JCOM has been the star of my portfolio since last summer. Valuation is obviously not as good after their recent spike. Thought I would bring it back to the top to inform those who didn't look the last time.

<font color="white"> (Really I just wanted to bump it to the top to brag about my pick) </font>

[AceHigh]

I been watching they look good.

Still I wouldn't brag too much.

http://finance.yahoo.com/q/bc?t=1y&amp;s...;q=l&amp;c=tol

[img]/images/graemlins/grin.gif[/img]

[BadBoyBenny]

Ahh the home builders. I bought some Beazer back in 2002 took a 20% gain and quit. Thought I missed the majority of the boom and it was time for a downcycle. All the worst decisions of my investing career have been selling winners too early, not buying the wrong stocks. Anyway, I've been more patient over the last 2 years and I'm still young and have plenty of time to learn from my mistakes.

If you recommended Toll Brothers I missed it and congrats on the big profit.

[Sniper]

Comparing apples and oranges, TOL and JCOM are in different industries. Both have clearly performed very well compared to the primary indexes.

[AceHigh]

[ QUOTE ]
If you recommended Toll Brothers I missed it and congrats on the big profit.

[/ QUOTE ]

I picked Toll because adios posted about it in the April/May timeframe and there was a big discussion about it back then.