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 20^th 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:

United Online, Inc. (UNTD), through its operating subsidiaries, provides consumer products and services over the Internet, where their respective brands have attracted a large online audience that includes more than 100 million registered accounts worldwide. United Online’s Content & Media segment provides social networking products and services (Classmates and StayFriends) and online loyalty marketing (MyPoints). Its primary Communications segment service is Internet access (NetZero and Juno), including NetZero Mobile Broadband (NetZero Wireless).