January Idea of the Month — Buying Rational Growth?

By Travis Johnson, Stock Gumshoe, January 20, 2012

As happens from time to time with my “Idea of the Month” picks, I came in to this week without a strong opinion about a stock that I wanted to feature for you.

There have been plenty of candidates I’ve considered for this high honor (insert smiley face here), and indeed, there’s one leading pick I would have gone with without question if I wasn’t writing primarily for an American audience — that’s Mail.ru, the London-listed Russian internet company (MAIL is the ticker in London, it’s priced in US dollars as a GDR). Unfortunately, not only is it difficult to trade that stock in the US, but it also got some positive news attention this week that drove the stock up about 10%, so it’s not quite as appealing as it was last weekend (quick and dirty analysis: their shares of facebook, vKontakte, Groupon and Zynga are almost certainly worth at least three billion dollars, half of their market cap — and the underlying business, built on rapid online advertising growth in Russia, two social networks, a few games, and email and messaging platforms, is profitable and growing revenues at a rapid clip (50%) as Russia’s broadband penetration finally hits its stride). But there’s no volume on the pink sheets and most people can’t easily trade in London, and the stock is certainly not without risk, so although I might well buy this one myself if we get a dip in the coming weeks I don’t feel right about suggesting it to the great multitudes of the Irregulars.

And as another example of the raft of “maybe” ideas, I’ve been keeping an eye on Hasbro (HAS) as well, the toy maker that’s a bit depressed at the moment due to disappointing holiday sales. I like their branding and their licensing endeavors, though I’m waiting to see if they can turn the corner and make some more of their properties into big entertainment franchises following the success (at least partial success) of GI Joe and Transformers. But they report in early February and from all accounts it’s likely to be a pretty weak report, so there doesn’t seem to be a strong reason to jump aboard before then. I may be too greedy, looking for a cheaper price for a stock that has been a solid dividend grower and that now trades for just 1X sales, but ...

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