Why Constant Contact, Gray Television, and Athlon Energy Are Today's 3 Best Stocks

The S&P 500 surges following the release of the FOMC minutes, while Constant Contact, Gray Television, and Athlon Energy soar by double-digits.

Apr 9, 2014 at 5:15PM

For a second consecutive day, investors pushed the S&P 500 (SNPINDEX:^GSPC) decisively higher, with the Federal Open Market Committee's minutes from its meeting last month providing the primary impetus.

Longview

According to the FOMC minutes, all of the Fed's policymakers voted unanimously to get rid of the static benchmarks it had in place that would determine whether or not to raise interest rates. Investors took this as a good sign that the Fed is going to remain as accommodative as possible, which may also translate into a slower tapering of QE3. Remember, QE3 has been instrumental in keeping long-term Treasury yields near historic lows, so ongoing QE3 could mean more time for businesses to take on debt and expand at generally low lending rates.

On the flipside, housing data continued to disappoint. The Mortgage Brokers Association released its weekly Mortgage Index this week, which showed a 1.6% decline in loan originations from the previous week. In spite of historically low lending rates, consumers have been sitting on their hands, and choosing to refinance or purchase homes at a weaker pace than in years' past simply because rates have risen slightly from their May 2013 lows. I believe this spoiled consumer certainly has the potential to wreck this rally, at least for the housing industry.

By day's end investors didn't seem to care too much for the MBA's news and, instead, focused on the optimism surrounding the FOMC's minutes release with the S&P 500 rising by 20.22 points (1.09%), to close at 1,872.18.

Leading all companies to the upside today was Constant Contact (NASDAQ:CTCT), an online marketing company geared toward small businesses and non-profit organizations in the United States. Shares vaulted higher by 28.7% after the company announced its preliminary first-quarter results after the closing bell last night. For the quarter, Constant Contact anticipates reporting revenue of $78.7 million-$78.8 million, with GAAP net income of $650,000-$750,000 (about $0.02 per share). It also boosted its full-year revenue forecast to $330 million, representing 13% year-over-year growth. By comparison, Wall Street was looking for just $77.3 million in quarterly revenue and $323.4 million for the full year. It's certainly tough to argue against Constant Contact's impressive results, and I've even been a fan of the company in the past, but following today's run higher, I believe it to be fully valued at 23 times forward earnings.

Television broadcasting company Gray Television (NYSE:GTN) gained 14.5% on the day after receiving an upgrade to outperform from neutral by Wells Fargo, as well as a $2 price target increase to $15, implying 51% upside from yesterday's closing price. The impetus for the upgrade was a reversal in opinion by analysts at Wells Fargo that the Federal Communications Commission would block local television sharing deals for things like ad sales, programming costs, and even facilities. With this no longer looking like a concern, Wells Fargo upgraded a number of companies within the sector. Gray has certainly been proactive about expanding its reach within the broadcasting sector by expanding through acquisitions, but at 21 times forward earnings, and following a greater-than-doubling of its share price during the trailing 52-weeks, I believe that optimism may already be baked into its shares.

G

Source: Eric Kounce, Wikimedia Commons.

Finally, oil and liquid-natural gas exploration and production company Athlon Energy (NYSE:ATHL) surged 13.1% after announcing agreements to purchase properties and undeveloped acreage for $873 million in cash in the Midland Basin. The deals were struck with five unrelated third-party sellers according to its press release, and have net proved reserves of 31 million barrels of oil equivalent, and estimated net reserve potential of up to 250 million barrels of oil equivalent. Because much of its purchase has yet to be drilled and/or tested, the company believes it will "represent years of low-risk growth potential." With a growth rate in excess of 40% and a forward P/E of a mere 19, I would argue that things are looking up for Athlon shareholders, and that shares may still have room to run higher.

Constant Contact, Gray Television, and Athlon may have soared today, but they'll all likely have a hard time keeping pace with this top stock in 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report, "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

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, and recommends Wells Fargo. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers