Posted about this stock the other day, didn’t receive much feedback so decided to do my own DD and shared it in wsb, I guess it also goes here pretty well.
It provides mailing and shipping solutions and services to its customers, people who sell goods online. They mostly pay a monthly fee and use their services. They are integrated with virtually all online platforms. Amazon, Shopify, Ebay, Walmart etc you name it, everyone is integrated in their platform which makes them the most attractive medium for multi-channel sellers too.
1M customers reached already. Churn is low.
From annual report, “Stamps.com® is a leading provider of Internet-based mailing and shipping solutions in the United States (US) and Europe. Our portfolio of solutions is marketed under the brand names Stamps.com®, Endicia®, Metapack®, ShippingEasy®, ShipEngine®, ShipStation®, and ShipWorks®. Our software solutions allow customers to print mailing and shipping labels for multiple carriers around the world through downloadable software, web-based user interfaces (UIs) and application programming interfaces (APIs). Our solutions provide our customers with access to discounted carrier rates for select carriers, including the United States Postal Service (USPS) and United Parcel Service (UPS). Our solutions also offer customers improved operational efficiency and financial savings. Our customers primarily include small businesses, home offices, medium-size businesses, large enterprises, e-commerce merchants, large retailers and high volume shippers including warehouses, fulfillment houses and omni-channel retailers.”
You must see all the images to understand my DD, I don’t know why reddit messed up my formatting
Earnings will be beaten handsomely by STMP, as COVID hasn’t really subsumed. Plus, the stock has a pretty big future considering the slow but sure shift to online sales.
Did I mention the $120M buyback?
Oh, and market cap is $3.72B.
The moat is not necessarily the strongest, management has to continually deliver to keep on growing. I am fairly confident that they can do it. But you may not be.
Too conservative management. You can easily see this from their non-existent debt and huge cash position.
Too low volume. Float is also only 18M. Options bid-ask spread is wild.
It’s kinda a deep value stock. There must be some reason which I am not seeing why it remains in this deep value territory. Private equity/activist fund sharks could target it, take it private and then DPO/IPO it at 10 times the valuation; but being almost 90% owned by various institutions, reduces this risk.
Common question: Why did the stock drop so much in 2019 and stuff?
Answer: They had an exclusivity deal with USPS where they got a lot of money for that deal. But management intentionally dropped it as USPS couldn’t make 2 day delivery or the fast delivery requirements that is necessary to compete.
The market reacted very badly for this short-term bump in the road. But COVID-19 has proved that management was right all along and it was absolutely necessary to drop that deal to grow the company.
Conclusion: I think the stock will pretty reliably beat the upcoming earning and the stock will jump heavily before the earnings only to dump a little or a lot after the earnings. Basically, buy the rumour, sell…
However, the stock is also a pretty decent one for long term holdings too.
Multiples are attractive keeping the growth in mind, and add to that the possibility of positive surprises from international expansion and probable acquisitions. If no acquisition occurs, the cash could get returned to shareholders through buybacks, which would be awesome too.
TL;DR: STMP will at least reach $270+ before earnings come out. My crystal ball says so. Plus, long term trend is sales moving online more and more, helping STMP in the process.