I'm a sucker for a great ticker symbol. That's why, when BabyUniverse (AMEX:BUN) went public earlier this month, I couldn't resist showcasing its choice of trading symbol. Yes, BUN could be a pseudo-acronym for BabyUNiverse. However, given the company's specialty in baby and maternity merchandise, the expression "BUN in the oven" takes on a fiscal form.
BabyUniverse isn't as glamorous as some of the more prolific new stock offerings this month, like Baidu.com (NASDAQ:BIDU) or Ruth's Chris Steak House (NASDAQ:RUTH). However, it has had a successful market debut. Priced at $9.50 when it went public on Aug. 4, the stock fetched as much as $12 a pop two days later. The stock has since settled back down to a more compelling level, though it's still trading higher than its IPO price.
BabyUniverse produced its first annual profit last year. The sum -- $0.07 a share -- wasn't much. However, it's not that bad given that the company reversed a profitable showing in this year's March quarter. It will report on its second-quarter results next week.
If the company is able to sustain last year's profitability, it may afford the stock the opportunity to take some serious baby steps forward. The top line hasn't been a problem for the company. Net sales grew by 61% last year after surging 76% higher in 2003.
This is clearly a compelling category. Even when Toys "R" Us was shuttering its toddler clothing division and putting its flagship toy stores up for sale, the one bright spot was its Babies "R" Us chain. Yes, you can find baby furniture and maternity wares at Wal-Mart (NYSE:WMT) and Target (NYSE:TGT), but it's one time when expecting parents feel vulnerable when it comes to spending and demand a wider selection of options. That's why chains like Children's Place (NASDAQ:PLCE) and Gymboree (NASDAQ:GYMB) have been able to thrive by dressing up the little ones.
BabyUniverse carries 33,500 items from more than 400 manufacturers, though just 38% of those items are stocked at the company's warehouse. The balance is fulfilled through drop-shipping arrangements. As an online entity, the company relies on its inclusion in comparison-shopping portals and search-engine marketing to get noticed. Even though the company has been around for eight years, that's the price you have to pay to make an impact in e-tailing.
The Rule Breakers newsletter team takes babies seriously. In the figurative sense, we are always looking to spot ultimate growth stocks before they move from crayons to perfume. It's where the obvious growth spurts are found. But I also mean that in the literal sense. This week, our product manager came back to work after giving birth to twins earlier this year. Our managing editor recently wrote a book about his experiences as a new father.
So maybe I'm just getting sentimental, with two boys of my own here. Then again, I can also be a pretty ruthless dad. I'll check out what the company has to say on Monday -- its first quarterly report as a public company. If the company disappoints me, I've got a "Time Out" chair, and I'm not afraid to use it.
Longtime Fool contributor Rick Munarriz realizes that it has been seven years since he had to fill out his last baby registry, but he still babies his boys from time to time. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy .
