Out Fox The $treet

Local.com (LOCM) reported another strong quarter last week and again guided to strong growth in 2010. All in all they reported 47% revenue growth in 2009 amazing considering the economic environment and the history of LOCM failures. For Q4, they reported 8% sequential growth and generated $2.8M in cash. All of the reported numbers and guidance handily beat estimates (not that many exist). LOCM has clearly turned the corner to a fast growth, profitable company. Stock is still lagging for a lack of attention as they only had 2 analysts with estimates at that time. What's interesting now is to look towards the estimates of LOCM. In the past (talked about this on 12/8- Local.com Ups Estimate Again ), analysts were highly focused on the GAAP numbers for them. This forced them to view LOCM as a money losing company because of stock based compensation and amortization of intangibles. Contrary to that view, LOCM has been generating strong cash for the last few quarters and reported adjus...

After the SP500 touched just below the 200EMA at 1046, Stone Fox Capital used the roughly 7% cash we had accoummulated from selling US Steel (X) a few weeks back to become fully invested. The portfolio has only $4500 left in cash so we'll likely look to trim a few positions on a solid bounce in the market next week. A huge oversold market (at one point down 4.7% in less then 2 days) creates a great entry point for adding to positions. Added to our positions in some extremely oversold stocks such as Foster Wheeler (FWLT), Terex (TEX), Puda Coal (PUDA), Phoenix Companies (PNX), and to a couple of stocks still in strong positions Local.com (LOCM) and Terremark Worldwide (TMRK). Most of these stocks will likely bounce the hightest, but if they stall at key technical levels on the way up that will trigger selling these purchases. Some charts like FWLT, TEX, and PNX are clearly broken. They all have 14 day RSI sub 30 and CCIs in the -160 range. For example, TEX has been down 14 of the l...

Local.com (LOCM), a leading local search company, upped guidance today from a 2% sequential gain to an 8% sequential gain. Revenue is expected to be in the range of $16.4M and adjusted earnings in the $.10 to .12 range. All from a stock just trading above $5 before the announcement. The earnings run rate is now on a $.40+ level with expectations for at least 24% revenue growth next year. Analyst still report earnings on a GAAP basis which is bizarre for a small tech company. Since the average analyst expects GAAP eps to grow by $.30 in 2010, we feel comfortable that adjusted net income could easily top $.70 on a conservative basis. Slap at least a 20 PE on that estimate and the stock zooms to $14 from the current high $5s. New Guidance The company now expects total revenue for the fourth quarter to be between $16.2 and $16.6 million, which at the midpoint would represent an 8% sequential increase over the third quarter of 2009. The company expects net income (loss)...

After reporting Q2 numbers that we'll discuss in more detail later, Local.com (LOCM) showed signs of actually starting to turn the corner from a serial disappointing money loser to a fast growing money maker. Then on Sept 14th, Nielsen reported that little $60M market cap Local.com made the Top 10 Search Providers for August. Its hard to tell if this really adds up to much considering they just grew with the market at 2.9% MOM, but the extra attention might just help. Local.com has always had an interesting concept of delivering great local internet searches at an easy to remember website. Unfortunately they've never caught the attention of the mass market and especially advertisers. Making these Top 10 lists might help spur on media attention and with just 0.2% of the market share they've got plenty of room for gaining share not to mention growing with the market. Table 1: Top 10 Search Providers for August 2009, Ranked by Searches (U.S.) ...