If Google's gargantuan market debut isn't enough to get you thinking about the potential of paid Internet searches, maybe FindWhat.com's (Nasdaq: FWHT) consistency will win you over.
Last night, the company continued its streak of growing its top line sequentially for 19 consecutive quarters, while growing pre-tax profits over the past 13 periods. The company ultimately earned $0.15 a share during its fiscal second quarter on a 59% spike in revenues.
While FindWhat has been aggressive in making strategic acquisitions, it's the organic bread-and-butter paid-search specialist inside that should get investors excited. Like Google's AdWords and Yahoo!'s (Nasdaq: YHOO) Overture have shown, there is money to be made in selling contextual ads that pop up when relevant keywords are entered into a Web-based search.
While sponsors are paying as little as a nickel to a dime for each interested clickthrough, it does add up. Because the traffic generated is targeted, it's as affordable as it is effective in reaching an advertiser's ideal audience.
Companies like Ask Jeeves (Nasdaq: ASKJ) can attest to the fact that it would be a shock if paid-search ads weren't a major driver behind Microsoft's (Nasdaq: MSFT) MSN.com finally becoming a profitable entity.
Readers of Stocks 2004 may recall FindWhat. While the stock has given up some of its gains in recent months, it is still trading comfortably higher than the $14 price it was fetching at the time of the publication's recommendation.
For all of 2004, the company is expecting revenues to come in between $167.5 million and $179.5 million. Adjusted pre-tax earnings are projected to come in between $1.05 and $1.13 a share.
Even if you slap the company on the wrist for producing guidance on an adjusted basis, rather than what the bottom line will ultimately look like, it's easy to fill in the blanks. Earning $0.30 a share through the first half of the year on what was $0.55 in adjusted pre-tax profits, actual earnings per share should come in around the $0.60 mark this year.
That finds FindWhat trading at an earnings multiple in the mid-20s, while its potential growth appears worthy of commanding a much loftier ransom. Affordable? Effective? It's not just the paid-search product but the paid-search providers that might live up to those attributes, too.
Have you ever paid for a text ad on a search engine? How does one start? Which sites are effective? Are the portals that charge as little as a penny worth it? All this and more in the Webmaster's Corner discussion board. Only on Fool.com.
Longtime Fool contributor Rick Aristotle Munarriz has been a vocal fan of the paid-search providers, but he does not own shares in any of the companies mentioned in this story.
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