Shutterfly (SFLY): Still fairly young
By Timothy Lutts, Chief Financial Strategist and Editor of Cabot Stock of the Month
From Cabot Wealth Advisory 4/25/11 Sign up for free Cabot Wealth Advisory e-newsletter
Shutterfly (SFLY) is the #1 online resource for storing and sharing photos, and using them to create photo albums, invitations, coffee cups, T-shirts and more.
Founded in 1999, the company, historically, has lost money in the first three quarters of every year, making it all up--and then some--in the fourth quarter. But it's been profitable on an annual basis since 2003, and it's grown revenues every year as well, telling you its own growth cannot be stopped by a weak general economy.
I like Shutterfly because it's the industry leader, because it's becoming better known every year, and because there are no limits to its growth.
And I like the stock because it's still fairly young. The company came public in 2006, it completed a textbook consolidation at 52 last week, and now it's trading at new highs.
So you could just buy SFLY here, but to get the best advice, as well as regular weekly updates on the stock, I suggest you follow the advice of Mike Cintolo, editor of Cabot Top Ten Trader, which has recommended it three times this year.
By Timothy Lutts, Chief Investment Strategist and Editor of Cabot Stock of the Month
It’s Shutterfly (SFLY), which bills itself as a “social expression and personalized publishing service,” but is basically the world leader in digital photo publishing.
If you’ve got a digital camera, and an Internet connection, they want your business, so you can create photo albums, print pictures on coffee mugs, and generally “share life’s joy.”
The stock was recommended by Cabot Top Ten Weekly twice last year (at 23 and 33) and once more last month at 37.
Here’s what editor Mike Cintolo wrote then.
“Shutterfly is the leader in the digital photo publishing business, be it calendars, scrapbooks, photo books, stationary and cards, you name it. While the competition is vast, Shutterfly is the leader in the space with great customer loyalty; 76% of the firm’s third-quarter revenue came from existing customers. And, overall, the industry is just getting going—just 15% of U.S. households have purchased some type of personalized photo product online, despite the fact that most have Internet connections and digital cameras. So the trick is to continually expand its offerings and ease-of-use, and Shutterfly appears to be doing both very well.”
Then, just last week, the company released a superb fourth quarter earnings report. Revenues were up 27% from the year before to $166 million, while earnings per share were up 17%, to $1.18 and trouncing analysts’ expectations of $0.95. Even more important, the company raised full-year guidance for 2011.
In response, the stock zoomed 18% in one day, on huge volume, as institutional investors clambered on board.It’s now trading in the low 40s. To the novice, this looks high. But to the experienced investor, the big-volume surge (out of a decent base) is a big green light that says the stock is likely to climb higher.
You might be able to pick up shares on a modest pullback toward 40, but you can get better—and ongoing—advice if you click here.
President, Chief Investment Strategist, Editor of Cabot Stock of the Month
Timothy Lutts heads one of America’s most respected independent investment advisory services, publishing eight newsletters to more than 165,000 subscribers around the world. Tim leads a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems. Under his leadership, Cabot has been honored numerous times by both Timer Digest and the Hulbert Financial Digest as among the top investment newsletters in the industry. Tim also edits Cabot Stock of the Month.
2800 Bridge Parkway, Suite 101
Redwood City, California 94065
|Index Membership: N/A
Industry: Consumer Services
Full Time Employees: 611
042511 Shutterfly (SFLY): Still fairly young