World Markets

Back in March  I posted the chart below here Weekly Recap 3-23-2012 to show world market performance from major stock markets around the world. Keep in mind, the chart below was year to date up to March 23, 2012.

The returns at that time were beyond exceeding expectations, the returns were outstanding for just three months into the year.  Fast forward to the same chart today of the same world markets and notice a much different picture.  

Since March, returns have vanished as the Brazil (Bovespa) Index is down -24% from the high.  The Japan (NIKK) is now down approximately -20% from its high.  The other country indexes have also fallen back from their highs ranging from -6% to -14%.  

Bottom Line:  The charts above illustrate that the current environment is not conducive to a buy and hold strategy.  I believe the world markets have put in a top in March, have sold off, and will remain under pressure throughout the year.  There will be oversold bounces higher, but I do not see new market highs achieved this year.  Thank you for reading.

Facebook IPO - Sitting on the Sidelines

This article was published on Seeking Alpha here Facebook IPO - Sitting on the Sidelines.  The Facebook IPO on May 18,  presents a rare chance to own an ultimate consumer stock, a company that almost everyone has heard of, or is actively using as a social media gateway to the world.  More details why we elect not to participate in this IPO is in the article.

ACOM - Wait Until A Lower Risk Buy Point

The last time I wrote about ACOM was their third quarter 2011 release here ACOM Third Quarter Results.  Ancestry.com released their first quarter 2012 earnings results on Wednesday April 25th. The company beat on top and bottom line vs. analyst expectations.  I wanted to dig a bit deeper into the numbers to see how the company's growth is compared to the past.  First, let's have a look at sequential revenue growth from 12 quarters back.  Keep in mind, I am looking at revenue growth from quarter to quarter.

2010 Sequential Revenue Growth

 7.2%  15.6%  6.5%  4.3%  = 33.8%

2011 Sequential Revenue Growth

10.0% 11.3%  1.8%  1.1% = 32.8%

2012 Sequential Revenue Growth  

 4.1%   6.9% est. 2.6% est.  2.1% est. = 16.3%

As shown above, ACOM is expecting a slowing of sequential revenue growth after the 2nd quarter release.  This should be viewed as seasonality, as the first and second quarter are the strongest quarters of the year.  But what stands out is the year/year growth drop off from 2010 and 2011 into 2012 of 16.3%.  Based on these numbers, it is understandable why ACOM announced it has purchased Archives.com for 100 million dollars on April 25th to potentially increase growth.

VALUATION:
I have a forward 2012 P/E ratio of 13.02 and a PEG (price earnings growth) of .62.  Both represent excellent value.  I have a price target based on PEG alone of $37.00 per share.

TECHNICALS:
The stock has good support in the $21 to $22 dollar range.  So I would be patient and wait for that area prior to starting a position.  Below is a weekly chart of ACOM.

Bottom Line:  ACOM has done a very good job of maintaining a stable stock price despite declining revenue forecasts.  They have initiated a 100 million potential stock buyback, plan on releasing new products, and has purchased Archive.com for 100 million.  The stock has strong support in the $21-22 dollar price range. I plan on remaining on the sidelines for now and will wait until the stock comes to a lower risk buy point in the low twenties until considering a buy.  Thank you for reading.