In a recent article in Kiplinger's, Earthlink (NASDAQ: ELNK
) was cited as being a particularly attractive low priced stock. Like other companies from the early days of the Internet such as Yahoo! (NASDAQ: YHOO
) and Microsoft (NASDAQ: MSFT
) , EarthLink has proven itself against the test of time.
In the Kiplinger's piece by Jennifer Schonberger, "^ WInning Stocks for $10 or Less," the recent activities of Earthlink were detailed that now make the stock attractive. These include a series of acquisitions. EarthLink has now reconfigured itself into a, "...provider of services for businesses, including virtual private networks and web hosting, as well as basic phone and data offerings." Overall, Schonberger noted that, "...the company is now positioned to see better results in the future."
This has been reflected in the share price direction of EarthLink. Year to date, EarthLink is up 18.44%. Over the last month of market action, EarthLink has risen 1.88%. Even more compelling is that the relative strength index rating for EarthLink is close to the level where a stock is considered to be oversold.
There is much on the balance sheet and income statement of EarthLink to appeal to investors. The price-to-sales ratio is just 0.61. On a quarterly basis, sales growth is up by 109.99%. At 55.07%, the gross margin is very strong for EarthLink.
The analyst community is also bullish on EarthLink. The mean analyst rating for EarthLink is the best possible at 1 (5 is the worst). The last analyst rating for EarthLink was a buy, issued by Dougherty & Company on September 7, 2011 with a target price of $9 per share.
Now trading around $7.58 a share, the mean analyst target price for EarthLink over the next year is $12.58. Like Microsoft, EarthLink pays a solid dividend of around 3%. Yahoo! does not pay a dividend.