Ancestry.com Inc. (ACOM) is listed on NASDAQ, and was trading recently at about $28 per share, near the low end of its 52-week range from $20.67 to $45.79. It has a market capitalization of just over $1 billion, and a trailing P/E ratio of 24. It pays no dividend.
As recently as August 2011, shares of ACOM were trading in the mid $40s. What has happened since then is a realization that ACOM is no longer a high growth, start-up company. The surest sign of that is that management, last fall, undertook a $50 million share buy back. True, growth companies plow earnings back to fund the growth. Stock buybacks occur when management has no more viable use for capital than to spend it on shareholder value. It therefore is possible that ACOM's 11% return on invested capital could fall from here.
ACOM had a solid third quarter in 2011. Its revenues were up 14% year over year, and earnings were $0.40 per share, compared with a year ago's $0.24 per share. This revenue growth was fueled by increased marketing, and a lower “churn” rate, both signs of a maturing company. Looking forward, this quarter's earnings estimate averages $0.34 per share, while next quarter is looking at $0.24. In the short-run, the trend is negative. No longer as small and mercurial as classic “.coms,” ACOM's stock may already have seen its worst days, and I believe it suitable for further investigation as an intermediate, growth and value play.
LM Ericsson Telephone Company (NASDAQ:ERIC) shares are listed on NASDAQ, and were recently trading at a little under $10 per share, near the midpoint of its 52-week range of from $15.44 to $8.83. It has a market capitalization of $31 billion, and a trailing P/E ratio of 14. It currently pays an annual dividend of $0.26 per share, for an effective yield of 2.6%.
ERIC is a well-known telecom company based in Sweden. It posted a negative surprise of 5% for the third quarter, and at that time suggested that, going forward, things would improve due to new smartphone offerings. ERIC's forecasts appear correct. For the current quarter, the average estimate is $0.25, and for next quarter, the market expects a drop to only $0.18 per share.
ERIC's shares will be under stress for some time due to the European economy's uncertainty. It has a huge cash hoard of $11 billion to see it through, but even then, is seems to have no real growth prospects, and I believe investors can do far better elsewhere.
Renren Inc. (NYSE:RENN) is listed on NASDAQ via ADRs. It was recently trading at about $4, near the low end of its 52-week range of from $24.00 to $4.50. It has a market capitalization of $1.6 billion, and no meaningful earnings ratio with a loss of $0.85. Shares just went public last May. It does not pay a dividend.
If BIDU is akin to GOOG in China, then RENN is the Chinese Facebook. However, it does not have anywhere near the profitability or track record, or market share in Asia, as Facebook has in the U.S. What it has is the same focus, that of social and entertainment, for the Chinese market.
RENN's public offering was priced at $24, and it has been almost straight down since then. Worries about censorship, the Chinese economy, and RENN's profit future have all weighed on the stock price.
It is not simple to choose Chinese equities due to accounting and legal distinctions between the Chinese and American economies. I don't see enough upside in RENN to justify overcoming those risks.
Sina Corp. (NASDAQ:SINA) is listed on NASDAQ, and was trading recently at about $60 per share. Its 52-week range is from $147.12 to $64.81, and has a current market capitalization of about $4 billion. It has no P/E ratio as it has lost money the past 12 months, and pays no dividends. Current EPS is -$6.42.
SINA is another Chinese-based Internet company. It is more diversified in its offerings than BIDU or RENN, and offers a variety of news, information and entertainment websites in its home market.
SINA shares have been in a downtrend over the last 12 months. What happened? Its 2011 numbers were not good, with declines in revenues and net losses. I fear for the combination of slowing growth in China, an overpriced real estate market, and competition from the likes of BIDU. Again, there is no sign of growth or other positives to warrant a bet that SINA's stock price will appreciably recover. I would avoid this stock for now.