EOT Trade Alert January 16, 2014

| January 16, 2014

January 16, 2014

Trade Alert:

   Buy EIGI May 2014 $15.00 Calls at $1.50 or better

Company Background:

Endurance International Group Holdings (EIGI) provides cloud-based technology solutions for small and medium sized businesses.

Short-Term Catalyst:

EIGI’s initial public offering took place on October 25th, 2013.  This little gem came into public life with little fan fare at $12 per share.  And it’s currently trading for $13.19 – about 10% above the IPO price.

This company is well positioned to profit from growing e-commerce sales.

Small businesses need to present themselves in a professional manner across many different platforms on the internet.  And EIGI provides an affordable way for them to establish and grow their online presence quickly.

I like EIGI for two reasons – it has great growth potential and it’s undervalued.

The two metrics to measure EIGI’s success are subscriber growth and average revenue per subscriber (ARPS).  And they’re performing well on both fronts…

Last quarter they added 70,000 net new subscribers and ARPS was $13.14… a solid gain on both fronts over the last year.  They should be able to continue growing these through a new advertising campaign and cross selling of higher margin products.

And compared to other internet companies like Web.com (WWWW) and evenSalesforce.com (CRM), EIGI is a bargain.

And to top it off… EIGI is expected to make 90 cents per share in 2014.  Yes, this is a fast growing tech IPO that’s actually going to turn a profit.

Let’s grab call options on EIGE now.

Trade Details:

Underlying Stock Symbol: EIGI
Current Bid-Ask Price: $0.75 – $1.25
Option “Buy Up To” Price: $1.50
Break-Even On Stock At Expiration: $16.50
Maximum Risk Per Contract: $150

Exit Strategy:

EIGI is trading at $13.19 per share.  Resistance levels will be at $20.00 and again at $22.00.  Remember, we want this stock to move higher.  Support levels will be at $12.00 and $11.00.  Conservative investors should look to exit at the first support or resistance level.  Aggressive investors may want to hold for a bigger move.



Category: EOT Trade Alert

About the Author ()

Comments are closed.