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A Stock Flashing a Green Light

Just last week, Shutterfly (SFLY) released a superb fourth quarter earnings report

American Mobility …

And the Great Recession

A Green Light


My mother’s brother Everett was buried last week.

He was 84 years old.

His nickname was “Mose,” on account of the way he would mosey along as a child.

He joined the Army after high school, becoming one of the first troops to occupy Japan.

He married at 21, and had three sons, who produced five grandchildren and two great-grandchildren.

He drove school buses, snowplows and rubbish trucks for the town of Essex, Massachusetts.

He managed the local gas station/garage—started by his father—for 45 years.

He was a Captain of the Fire Department for 20 years, and Chief for 10, as well as a long-time member of the Planning Board.

And he drove across the United States five times in “The Great American Old Car Race”—piloting a 1927 Chrysler and a 1936 Ford—just for fun.

More than just a good man, Everett got things done, and in that way, was a great asset to his community.

And there’s no doubt his community recognized that, as some 150 people turned out for his memorial service, despite the deep snow that made walking and parking difficult.

The service was typical, mingling the traditional Christian homilies about life and death with personal recollections from relatives and friends about Everett’s contributions to the world.

But left unsaid was one important fact.

Everett lived his life in the same town where his ancestors lived theirs … going way back to 1640, more than 370 years! As such, he was more than a resident; he was a living and breathing part of the town, embodying what it had been and what it could be. That tradition, in no small way, gave his life a sense of purpose.

And I’m wondering if that’s increasingly rare today in the U.S.

From the beginning, our country has been characterized by freedom, which includes the freedom to move and settle in a new place where economic opportunity is superior.

And for centuries, people did that.

They moved West, for land

They moved to cities, for jobs.

And they moved South, for the climate.

But very few ever moved back home. Home was a place from which to escape, to blaze one’s own trail. Home was anchors and shackles, while “somewhere else” was freedom and opportunity.

Economically, this mobility was a tonic for the country. It enabled growth that more established countries, constrained by both geography and tradition, could only dream about.

But I’m wondering if there was a cost to this mobility.

With every move, the fabric that connects us to the past becomes a little more frayed.

With every move, the traditions that foster responsibility and stewardship in our community become a little weaker.

And with every move, we become a little more like Las Vegas—a desert full of people from somewhere else—and a little less like Essex.

But now Las Vegas is hurting.

The Great Recession has put an end (at least temporarily) to the credit-fueled expansion that built the city.

The Great Recession, in fact, made 2008 the year that fewer Americans changed residence than in any year since 1962.

And the Great Recession accelerated the trend (started in 1980) toward more multi-generation households (defined as a family household that contains at least two adult generations or a grandparent and at least one other generation.)

As I stood in the cemetery of Essex, surrounded by the headstones of generations of Everett’s (and my) ancestors, I couldn’t help but wonder if this is one silver lining to the end of the great housing boom, and if it will result in more people, like Everett, staying put in the community where they’re born, to become truly solid members of their own communities.

Comments welcome.

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Of course, the Internet promises numerous communities, from Facebook to Twitter to, and while they can’t duplicate the experiences of geographic communities, they do provide great opportunities for education, entertainment and profit.

Which brings me to today’s recommended stock.

It’s Shutterfly (SFLY), which bills itself as a “social expression and personalized publishing service,” but is basically the world leader in digital photo publishing.

If you’ve got a digital camera, and an Internet connection, they want your business, so you can create photo albums, print pictures on coffee mugs, and generally “share life’s joy.”

The stock was recommended by Cabot Top Ten Report twice last year (at 23 and 33) and once more last month at 37.

Here’s what editor Mike Cintolo wrote then.

“Shutterfly is the leader in the digital photo publishing business, be it calendars, scrapbooks, photo books, stationary and cards, you name it. While the competition is vast, Shutterfly is the leader in the space with great customer loyalty; 76% of the firm’s third-quarter revenue came from existing customers. And, overall, the industry is just getting going—just 15% of U.S. households have purchased some type of personalized photo product online, despite the fact that most have Internet connections and digital cameras. So the trick is to continually expand its offerings and ease-of-use, and Shutterfly appears to be doing both very well.”

Then, just last week, the company released a superb fourth quarter earnings report. Revenues were up 27% from the year before to $166 million, while earnings per share were up 17%, to $1.18 and trouncing analysts’ expectations of $0.95. Even more important, the company raised full-year guidance for 2011.

In response, the stock zoomed 18% in one day, on huge volume, as institutional investors clambered on board. It’s now trading in the low 40s. To the novice, this looks high. But to the experienced investor, the big-volume surge (out of a decent base) is a big green light that says the stock is likely to climb higher.

You might be able to pick up shares on a modest pullback toward 40, but you can get better—and ongoing—advice if you click here.

Yours in pursuit of wisdom and wealth,

Timothy Lutts
Cabot Wealth Advisory

Timothy Lutts is Chairman Emeritus of Cabot Wealth Network, leading a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems.