Why United Online, Portfolio Recovery Associates, and AVG Technologies Are Today's 3 Best Stocks

The S&P 500 recoups nearly all of yesterday's loss while United Online, Portfolio Recovery Associates, and AVG Technologies all ascend by double-digits.

Feb 20, 2014 at 5:15PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

With the absence of housing data on the docket today, a trio of positive economic stories helped to push the broad-based S&P 500 (SNPINDEX:^GSPC) higher, recouping nearly all of yesterday's loss.

It certainly wasn't a large decline, but a dip of nearly 1% in initial weekly jobless claims to a seasonally adjusted 336,000 would signify slow but steady improvement in the jobs market and could speak to the continuing decline in the national unemployment rate.

Similar to yesterday's Labor Department Producers Price Index reading of a  0.2% expansion in January, the Consumer Price Index last month rose by just 0.1% for both the CPI as an aggregate and core CPI figure. Economists would certainly prefer to see some expansion in this number, but would ultimately like it to remain low, since it's a measure of inflation. This modest increase simply signals that consumers are paying a bit more for the same basket of goods, which is generally good news for businesses and bottom-line profits.

Finally, the U.S. leading indicators index rose 0.3% in January, matching the forecast from economists and pointing to an economy that is likely to rebound after much of the nation was smacked with extremely cold weather in January.

Tack on a number of positive earnings reports and the S&P 500 ended the day decisively higher by 11.03 points (0.60%) to close at 1,839.78, the index's sixth gain in eight sessions.

Leading the pack to the upside today was social networking and Internet access provider United Online (NASDAQ:UNTD), which surged 29.5% after reporting its fourth-quarter earnings results. This quarter was a bit confusing because it excluded FTD (NASDAQ:FTD), the floral retailer that was spun off from United Online in October of last year. Strictly comparing its Internet and social networking businesses, United Online's revenue fell 5% to $62.6 million, while adjusted net income per share rose 167% to $0.32 from $0.12 in the prior year. Now here's the confusing part: earnings per share missed by $0.14, but revenue handily topped the $58.5 million-$61.5 million guidance from its third-quarter report. While I'm pleased to see its Internet business performing better than internal estimates, the fact that United Online discontinued its quarterly dividend program at the end of January doesn't give investors much reason to hold a company with unexciting top-line growth. I'd consider today's pop an opportunity to take some money off the table.

Portfolio Recovery Associates (NASDAQ:PRAA), a purchaser and manager of defaulted consumer receivable in the U.S. and U.K., vaulted higher by 17.7% after announcing fourth-quarter results and the purchase of Aktiv Kapital for $880 million. The deal will be completed using a combination of cash and other debt/credit instruments, and will cost Portfolio Recovery about $15 million spread over its first- and second-quarter results. However, Aktiv Kapital will expose PRA to new markets in Europe and Canada, along with creating one of the largest nonperforming consumer debt acquirers in the world. Despite the expensing, the acquisition will also be immediately accretive to earnings. For the fourth quarter, PRA matched expectations by reporting a 20% increase in net revenue to $184.9 million as adjusted EPS improved 30% to $0.91. While I do share investors' optimism with today's purchase, I'd suggest waiting for a sizable pullback before reevaluating PRA.

Finally, Internet and networking security company AVG Technologies (NYSE:AVG) soared 13.2% after reporting much better than expected fourth-quarter results. For the quarter, AVG delivered a 7% increase in revenue to $101.9 million as EPS galloped to an adjusted $0.52 from $0.32 in the year-ago period. Wall Street had only expected AVG to earn $0.41 in EPS on $95.2 million in revenue. What really has shareholders excited is the 25% increase in subscription revenue to $67.3 million. Subscription revenue is recurring, thus providing low turnover and reliable cash flow for AVG. Looking ahead, AVG anticipates emphasizing its subscription-based model which could impact the 2014 top and bottom lines in a negative fashion. It issued a full-year forecast that was in line with the Street at $365 million-$405 million in revenue and EPS ranging from $1.80-$2.10, which would be down at the midpoint from the $407 million and $2.16 in EPS it reported for the full year last night. However, with a growing need for cybersecurity, I'd personally consider any sizable pullback a buying opportunity. 

United Online, Portfolio Recovery Associates, and AVG may have soared today, but they'll all likely be hard-pressed to keep up with this top stock in 2014
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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of United Online and recommends Portfolio Recovery Associates. 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 Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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