Liquidity Services Shares Surged: What You Need to Know (LQDT)

Liquidity Services Shares Surged: What You Need to Know

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What: Shares of online auctioneer Liquidity Services (Nasdaq: LQDT ) soared 25% in intraday trading Thursday after announcing plans to buy Jacobs Trading's consumer goods remarketing business.

So what: The move should allow Liquidity Services to add significantly to its consumer business, as well as expand its relationship with retail behemoth Wal-Mart (NYSE: WMT ) . Given the stock's huge jump, investors wholeheartedly agree with the strategy and the $140 million purchase price ($80 million in cash, $20 million in stock, $40 million in a seller promissory note).

Now what: Don't let today's pop keep you from following the stock. Jacobs Trading has grown its top-line at a consistent 20%-plus clip over the past several years and is expected to add per-share earnings of $0.28-$0.33 to Liquidity's 2012 results. With its PEG ratio still sitting at a reasonable 1.0, Liquidity Services is certainly worth looking into.

Interested in more info on Liquidity Services? Add it to your watchlist.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Liquidity Services and Wal-Mart, as well as creating a diagonal call position in Wal-Mart, and The Fool owns shares of it. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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