Warning: You Might Find This Offensive!

| September 29, 2010 | 0 Comments

What do you think of when you hear the name GoDaddy.com?  I’ll bet images of scantily clad women in sexually provocative situations cross your mind.

Don’t fret… you’re not a deviant of some kind.

This is exactly what the company wants you to think of when you see or hear their name.  It’s one of the oldest ploys in advertising… sex sells!

And it works like a charm every time.

For those who have no idea what I’m talking about, let me briefly explain.

GoDaddy.com made a name for themselves during the 2005 Super Bowl.  The company aired a commercial with an attractive woman who had a “wardrobe malfunction” in front of a clearly embarrassed older man.

The commercial was an instant global sensation.

But more importantly, it brought in countless new customers.  The company’s market share went from 16% before the ad to a stunning 25% after it!  As you might imagine, GoDaddy.com has now made its provocative commercials a regular Super Bowl attraction.

And the controversial advertising strategy has paid off in spades.

GoDaddy.com is now the world’s leading registrar of internet domain names.  They have more than 43 million domain names under management.  And the company boasts it adds a new one every second.

Now GoDaddy’s ready to capitalize on their amazing success.

The company has put itself on the auction block.  GoDaddy founder, Bob Parsons, is looking to sell the company to the highest bidder.  According to the Wall Street Journal, the company could sell for $1 billion or more.

Word on the Street is private equity firms are lining up to bid on GoDaddy.

You see, private equity shops love the online services business.  It generates steady cash flows from monthly fee-based subscriptions.  And there’s huge potential for up-selling eCommerce and more sophisticated online marketing services.

So, how can we profit from this situation?

Unfortunately, we can’t make money on the GoDaddy deal.  The company is privately owned.  However, the frenzy over GoDaddy could spark a wave of acquisitions in the industry.

In fact, several public online services firms are already seeing their stock prices move higher.

    • Digital River (DRIV) is up 11%
    • Netsuite (N) is 21% higher
    • GSI Commerce (GSIC) is up 11%
    • Ebix (EBIX) is surging 29%

These stocks are all jumping on speculation they might be the next acquisition target.  You could certainly take a position in any or all of them.  And you might eke out a decent gain.

But there’s a major drawback with this strategy…

These companies are the larger, more well-known players in the industry.  They have share prices ranging from $23 to $32.  And their market caps start at $821 million and go as high as $1.6 billion.

You’d have much bigger upside potential with a penny stock in the same industry.

And I’ve got just the one for you…

This amazing online services company has a share price under $10 and a market cap less than $150 million.  Revenue is expected to jump 24% this year and 37% next year.  And earnings are forecast to soar 85% next year.

Best of all, the company’s a much better value than the bigger competitors.  They sport much lower price to book and price to sales ratios.  Plus, their PEG ratio of 0.49 is the lowest of the bunch.

And here’s the real kicker…

These shares offer astonishingly higher near-term profit potential.  You could easily double your money over the next 12 months.

So, what is this fascinating company?

More than anything, I want to tell the world about this stock.  I’m so excited about this company I want to yell their name from the nearby mountaintops.

But that just wouldn’t be fair to my paying subscribers!

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Category: Penny Stocks

About the Author ()

Robert Morris is the editor of Penny Stock All-Stars, an investment advisory focused on discovering small-cap and micro-cap stocks that are destined to become the market’s next Blue Chips. The Wall Street veteran and small-cap stock specialist is also a regular contributor to Penny Stock Research. Every week, Robert shares his thoughts with our readers on a variety of penny stock-related topics. In addition to Penny Stock Research, Robert also writes frequently for two other free financial e-letters, ETF Trading Research and the Dynamic Wealth Report. He’s also the editor of two highly successful and popular investment advisories, Biotech SuperTrader and China Stock Insider.

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