TPS Trade Alert – May 15, 2014
May 15, 2014
Recommendation:
Buy Bridgeline Digital (NASDAQ: BLIN) up to $1.10 per share.
Trade Rationale:
These days, it’s a big surprise if a business doesn’t have its own website. No matter how small a company is, most of us expect it to have a webpage, even if it’s just a basic one. That’s true whether the company services retail clients or sells to other businesses.
In fact, most websites allow clients to make purchases online. Integrating sales to a company’s webpage is something that’s also a piece of cake in this day and age.
Still, building websites of this nature is the not the sort of thing the average person can do.
The task of web design, feature integration, and everything related is typically outsourced to a third party. As businesses rely more and more on the Internet for their well-being, the design and maintenance of their websites becomes more and more valuable.
That’s where Bridgeline Digital (NASDAQ: BLIN) comes in.
BLIN develops software technology, tools, and services that help organizations optimize their online business processes. The company’s technology is focused on unifying web content management, analytics, e-commerce, and online marketing capabilities in an effort to enhance management’s capabilities in regard to web and customer experiences.
In other words, BLIN products and services are useful to companies who need help with most everything that has to do with running their businesses online.
For example, the company’s iAPPS content manager allows non-technical users to create, edit, and publish web content using a browser-based interface. Meanwhile, iAPPS commerce features enable customers to manage and analyze all aspects of their online business transactions using real-time dashboards.
What’s more, BLIN offers a digital subscription to companies wishing to outsource their web application hosting. It allows businesses to pay a monthly fee to eliminate the need to manage in-house IT infrastructure.
There are several reasons to like BLIN.
First off, the target market for the company’s products and services is huge. In the ten states BLIN operates in, there are around 50,000 companies meeting the criteria for a potential client. And, the company’s goal is only to gain 180 new customers per year. That doesn’t even include divisions within larger companies or franchise organizations.
Not to mention, the company already has signed big name clients such as GE Health Care and Triumph Motorcycles. As such, BLIN has excellent case studies to use in its sales process.
From a financial perspective, the company’s most recent quarter gives reason to be optimistic.
Total revenues climbed 5% year-over-year to $6.5 million for the quarter. More importantly, revenues from the core business (such as iAPPS) climbed by 33% from the prior year. At the same time, subscription revenues jumped by 100%.
In addition, the company raised revenues guidance for 2014 from $24.5 million to $28 million. Even better, BLIN expects to generate positive Adjusted EBITDA for the upcoming fiscal year.
Despite, the company’s bright financial prospects, the shares are still trading at dirt cheap prices. In fact, the stock is trading at just 0.65x sales and 0.72x book value.
Basically, we wouldn’t be surprised to see the BLIN share price double in the next year.
Now’s your chance to buy shares in this promising company before it ends up on most investors’ radar screens.
Remember to use limit orders when placing your trades. And stick to your position sizing rules.
Key Facts:
| Company: | Bridgeline Digital |
| Ticker: | BLIN |
| Recent Price: | $0.90 |
| Market Cap: | $16.7 million |
| Avg. Daily Volume: | 143,587 shares |
Chart:
Category: TPS Trade Alert
