Remember our old Daily Double feature? The one that took a closer look at companies that had doubled in a year's time? No? Well, it's understandable if you don't. It's been more than four years since we shut down the feature. However, during this holiday-shortened trading week, I'm feeling awfully nostalgic. So don that throwback Fool cap, and let's take a look at stocks that have had it going on lately.
How did it double?
Shares of aQuantive (NASDAQ:AQNT) were trading in the single digits a year ago. As a profitable provider of a suite of services to enable successful online advertising campaigns, the migration of leading marketers to the Internet brought a ton of new business to aQuantive's porch step.
This past quarter, revenues surged 69% higher. Profits, adjusted for a tax benefit last year, clocked in 169% higher. The market rarely ignores heady results like that. In aQuantive's case, the result is a buoyant share price that resulted in the company's stock tripling over the past year.
Business description
aQuantive was the product of a merger between Avenue A and SBI.Razorfish. With a few more acquisitions along the way, the company has become a well-rounded interactive advertising agency. From Web design to cyberspace media planning, aQuantive is there to either get a corporate site up and running or grow its visibility by coordinating marketing campaigns through paid-search titans like Google (NASDAQ:GOOG) and Yahoo! (NASDAQ:YHOO) or just about anywhere else online where ads are being served.
Yes, the company's name is odd, not to mention an editorial nightmare. Curse you, eBay (NASDAQ:EBAY), for encouraging new media companies to capitalize the second letter of a nondescript corporate moniker instead of the first.
How could you have found this double?
According to PricewaterhouseCoopers, online advertising will be a $12 billion business this year. Through the first half of the year, corporate spending on Internet-based campaigns rose by roughly 25%, many times over the growth of traditional media outlets. It didn't take a whole lot of common sense to figure out that cyberspace would continue to nibble away at the ad industry's market share. However, that didn't mean every single player would be a beneficiary. Then again, even a laggard in this space like 24/7 Real Media (NASDAQ:TFSM) has watched its stock nearly double over the past 12 months.
A year ago, I wrote a column titled "Google's Kissing Cousins" that went over some of the companies that would be riding Google's coattails in the online advertising revolution. aQuantive was one of the three companies I singled out. ValueClick (NASDAQ:VCLK) and Rule Breakers newsletter pick CNET (NASDAQ:CNET) were the other two stocks. All three have trounced the market since then, but aQuantive has been the fastest grower of the three.
Where to from here?
The company's acquisitive ways may blur the true organic top-line growth, but the bottom line doesn't lie. aQuantive is doing well. No, it's not cheap. It's trading at just less than 60 times this year's profit projections. Analysts see the company growing earnings by a little better than 30% next year. So even based on next year's net income, aQuantive is not necessarily a bargain at 45 times forward earnings.
Then again, the more you learn about aQuantive and its knack for absorbing smaller operators seamlessly into its corporate strategy, the easier it is to take a shine to the company. The advertiser migration will continue. aQuantive will continue to grow. As an investor, you can't ask for much more than that.
"Daily Double" profiles stocks that have doubled over the past year. If you are the type of investor who relishes these ultimate-growth-stock situations, do consider a free trial subscription to Motley Fool Rule Breakers.
Longtime Fool contributor Rick Munarriz believes in interactive advertising, but he does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
