- New CEO Sharon Rowlands has a proven history of execution and delivering results, particularly in sales driven organizations like ReachLocal. She also recently bought $500,000 worth of shares.
- Trades at about 0.25x sales ex-cash with no debt and long-term profitability projected to occur by the back half of 2015 according to the new CEO’s turnaround plan.
- The new ReachEdge product and SaaS marketing suite have been well received by SMB clients and is on the forefront of web development technology for small and medium businesses.
After pricing its IPO at $13 only 4 years ago, ReachLocal (NASDAQ:RLOC) has been trading in the $5s for the better part of this month. The company operates in the much hated although rapidly growing SMB marketing industry. It has competition like Constant Contact (NASDAQ:CTCT), Vocus and Yodle – an upcoming IPO that will draw attention to the space. Vocus recently got bought out by a private equity group led by its management at a huge premium. This was another company that investors avoided like the plague only to be kicking themselves later for not taking advantage of what was obvious public market mispricing. These companies all compete in the marketing of products geared towards small and medium sized businesses. ReachLocal most specifically operates in the premium SMB niche and offers an incredibly comprehensive advertising platform with a sales volume so high that I was more than a little shocked at how much of a discount to market that this company is trading at.
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