Tying the KNOT
On Monday of this week, I bought shares of TheKnot.Com (KNOT) at around $16.50. This is a company that I have followed since the last couple of years, when my wife and I first started planning our wedding. My wife aka Sofia aka BrideZilla is or rather was a knotty (or knottie). I would watch her tirelessly navigate the pages of KNOT, posting questions, shopping, getting ideas for party favors and wedding cards etc. Initially, I thought it was just another site, until I used it to look up honeymoon ideas (we went to Maui btw). It was then that I realized the true value of this site and why my wife returned to it so frequently.
We all know (my wife included), how crazy brides tend to get. But obsessive as they are, it is admirable how much they like to seek out help and give help in return when it comes to weddings and wedding planning. Sofia would post a question, comment on someone else’s question and all this, while looking up wedding cake designs and center pieces. Quite remarkable really. So here we had a great site, fabulous content and the perfect target audience – desperate brides!!! This was (and is) a one stop shop for all women who are planning the single most significant event (read: the single biggest “its all about me” day) of their lives. The only event for which they spare no expense. The only event that they dream of since they were little girls. The only event that makes them lose sight of their senses. Talk about the perfect content for the perfect audience.
Before I proceed further, let me calm my female audience down. That is if I have any left. I am happily married and my wife defines the stereotype above with no regrets. She agrees and has approved of my writings here (rare occasion that I involve her with my work). There are some of you who are not the stereotypical bride and even like to get married in Vegas followed by Pizza and a round of golf with their new husband. But those of you are far and few so please understand that I am generalizing here. Phew! close one.
Anyway, I truely admire any entity that finds such a niche and executes to perfection. With 312% quarterly earnings growth (yoy), no debt and $30 million in cash, here is a stock that could have been bought for $8 this time last year. The company has beaten analyst estimates handily the last 3 quarters by 50%, 40% and 25%. So why did I not buy the stock last year? I was in Maui on my honeymoon. And when I next thought of buying, it had run up 50% within a matter of 3 months. So I have waited patiently for it to come down and after hitting $21 earlier this year, the stock was finally at bargain levels on Monday when I bought it.
KNOT is volatile – all small caps are. It is an expensive stock if you just look at its P/E ratio. But looking at its business model, audience, cash flow and clean balance sheet, along with its savvy management team that bought Wedding Channel sometime last year, I think this is perhaps the single biggest growth story out there. Since my purchase, the stock has surged 12%. I believe the stock is at least worth 21 in the short-term and even more over the next year or two.
– Faisal Laljee
consumer net stocks have no fans.
NOT has been criticised by
Herb greenburg.
Also on the upside early Tuesday was wedding goods provider The Knot
11:43am 08/01/2006
KNOT19.67, +0.61, +3.2%) , which was up more than 2% despite the firm’s rating cut to market perform by JMP Securities.
09:35 am Garmin: Am Tech/JSA Research initiates Sell . Target $75. Firm initiates with a Sell citing the following: 1) A cautious outlook for consumer spending; 2) GRMN has grown at the expense of struggling competitors, Magellan in particular – incremental share gains will be more difficult; 3) New competition is entering the market; 4) 28-30% net margin is very difficult for a hardware supplier to sustain; 5) They believe that longer term demand for navigation will shift away from PNDs to auto in-dash systems and cell phones; 6) All stocks with significant PND market exposure have recently blown up; 7) The stock has been a great performer, while the tech sector, retailers and most companies with consumer exposure have been weak. They note that GRMN reports tomorrow and upside is expected, benefiting from competitors’ missteps this quarter and long history of “beat-and-raise quarters”. They like the risk-reward for the stock to decline on good results, rather than extend to new all-time highs