What’s Up At Stamps.com? (STMP)

It’s always interesting to peruse the 52-week highs and lows for trading ideas.  Sometimes you see some head-scratchers and sometimes you get Eureka.  A review of the highs today showed a more than interesting move in Stamps.com (NASDAQ: STMP).  The company does exactly what you would guess, internet-based postage solutions.  It is part of the USPS-approved PC Postage Service.

Today the stock is up 5% at $15.10 with about 20 minutes to the close, and its 52-week trading range is (was) $8.47 to $15.00.  Interestingly enough, it has only traded about 122,000 shares and its average daily volume is about 150,000 shares.  This now has a $292 million market cap.  It’s liquidity as of last quarter was more than $90 million in cash, equivalents, and long-term investments, while it has essentially no long-term debt.

This is one is extremely thin on coverage with First Call noting 3 estimates and a consensus of $0.63 EPS on $87 million in revenues for 2008.  So there is nothing in the remedial analysis that screams total bargain basement nor anything that screams grossly over-valued here.  There have been no major analyst calls.  Back in April this was trading under $11.00.

Could this be genuinely as simple as people not using gas to go to the post office?  Of course not.  There may still be some excitement about last month’s approval to protect its "tax net operating losses."  It also has a provision that any holder acquiring more than 5% of the shares outstanding has to first obtain a waiver from the company’s board of directors and those holders who already hold more than 5% cannot make any additional purchases of Stamps.com stock without a waiver.

Here was the description of that move:
Stamps.com currently has approximately $250M in Federal NOLs and $150M in State NOLs, with a potential value of up to $95M in tax savings over the next 15 years. The value of these NOLs could be significantly impaired unless the Company avoids potential transfers of its stock that could trigger such an “ownership change” under Section 382.

We had looked at this one for our Special Situations newsletter before, but we had to pass on it because the stock options to hedge the stock were too illiquid on the surface.

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Jon C. Ogg
June 4, 2008