The economic slowdown was especially pronounced in the media and
advertising industries as companies grew weary of promoting
products to cash-strapped customers who weren't going to buy their
products anyway. But consumer spending has started to perk up,
leading ad budgets to re-open. Large media companies are now
speaking of moderate revenue growth this year and some small niche
players are seeing even more robust opportunities.
One rising name is
DG FastChannel (Nasdaq: DGIT)
, which provides digital delivery services for major media
companies. In recent years, the company has steadily increased the
types of services it offers customers, and reaping the benefits as
sales are rising at an accelerating pace. Sales growth, which had
exceeded +30% each year in 2006, 2007 and 2008, cooled to +22% in
2009, but looks set to move back up above the +30% mark again this
year and next.
DG FastChannel shows the true power of earnings leverage . As
reported before the opening, cash flow rose more than +70% in the
first quarter on a +31% jump in sales. That helped push shares up
+13% to an all-time high this morning. Look for continued earnings
leverage, as clients look to focus on more higher-margin
high-definition ads and programming.
Despite the steady climb in the shares, they're not expensive at
around 20 times likely 2011 profits (which will be reflected after
the consensus estimate has been raised). There's a party going on
here, but it's not too late to join.
Company Name (Ticker)
|DG Fast Channel (Nasdaq: DGIT)
|*Based on consenus estimates
prior to recent earnings release
"Look ahead, not behind." That's the suggestion from execs at
, which sells a range of smart-grid products that boost the
efficiency of utilities. Why look ahead? Because although sales in
the most recent quarter fell from a year ago, backlog has swelled,
implying an eventual sales turnaround . Investors took the bait, as
shares are up nearly +15% in today's trading, following the release
of second-quarter earnings after Tuesday's close.
Shares of insurer
Conseco (Nasdaq: CNO)
are rising from the ashes, as the company slowly re-builds its
tattered reputation. The Indiana-based firm was once a
highly-coveted insurance play, growing so quickly that it bought
the naming rights to a National Basketball Association arena (a
sure-fire kiss-of-death, in hindsight). Management malfeasance
eventually led to an investor exodus, and by last spring, many
assumed that Conseco would not survive the financial crisis.
But recent capital injections and a much healthier operating
outlook, as reflected in the company's solid first-quarter earnings
report after the close Tuesday, have management speaking of "the
new Conseco." The long-standing taint associated with past
management has kept this stock off many radars, so despite an +11%
spike in the shares today, they still trade for just 42% of
tangible book value . As the company now looks to be finished with
its share-diluting capital-raising exercises, Conseco is likely to
see further buying interest in the quarters to come.
-- David Sterman
Disclosure: David Sterman does not own shares of any security
mentioned in this article.