Thursday, February 17, 2011

Vertro Inc (NASDAQ: VTRO) Q1 2011 Price Target

Recent price: 4.10$
P/E Ratio: 15.45
3 Months Target Price: 5.50$

Company Description
Vertro, Inc. is an Internet company that owns and operates the ALOT product portfolio. Through ALOT, consumers can discover apps which they can display through three specific products: ALOT Appbar, ALOT Toolbar and ALOT Home. These apps are developed in-house and by third party app developers and are designed to enhance the way people interact with content online. ALOT has millions of users across its product portfolio. Together these users conduct high-volumes of type-in-search queries, which are monetized through third-party search and content agreements.

Confidence Margins
Strong resistance $7.25 (+77%)
Light resistance $5.43 (+32%)
Light support $2.74 (-33%)
Strong support $1.69 (-59%)

This is a pretty well known scenario. The company reports a quarter that fell short of what analyst's were expecting. fortunately for investors, those falls from the stock price tend to overshoot and dramatize the situation. There tends to be a rally as people digest the news and the information on Vertro Inc. leads us to think that it is also the case for this company. The company might also be considered a value play as their financial situation improves and if one intends to hold it for the long run.

Entry strategy
For the cautious investor:
Buy the stock for 4.50$ or less.

For the risk-taking trader:
As this company doesn't have any option contracts outstanding, the best thing to do here is to follow the same strategy as the cautious investor. A good way to take advantage of this stock might be to use some margin, although the use of debt is not a good idea in our view and with such potential returns, there should be no need for that.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 5.50$, or keep it until 6.50$ if you are more bullish in your own analysis. It is highly recommended to keep the position on check if it goes sour, the supports are very close to one another and if the stock breaks through them, this could be devastating. The second support should be seen as an exit point.

For the risk-taking trader:
Same strategy as the cautious investor.

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