The Buyback Letter Premium Portfolio, which trades monthly, recommends selling Jarden Corp. (JAH), recommended here on September 26, and using the proceeds to buy the stock profiled below.
“Web services company AOL, Inc. (AOL, $37) had one of the wildest rides in the last dozen years. The company, which spans online content, products and services for consumers, publishers and advertisers, was riding high at end of the 1990s as the U.S. signed up in droves for ‘you’ve got mail.’ It bought Time Warner in 2000 and created AOL Time Warner, the world’s largest media company.
“But as broadband Internet became increasingly popular, AOL’s dial-up service lost popularity — so much so that it reported a $99 billion loss by 2002. By 2009 it divorced itself from Time Warner.
“Since then, it has begun a slow but steady comeback, hiring former Google leader Tim Armstrong as CEO. He has been optimizing revenue potential by improving content at AOL properties Huffington Post, Patch, Games.com and blogs TechCrunch and Engadget, increasing global ad revenue, seriously confronting video through its own YouTube channels and its own video portal called On, and improving its email service.
“It’s a $3.36 billion company that is expected to generate about $2.13 billion in sales next year. It posted $2.15 billion in revenue for 2012. Operating earnings have improved and should reach $1.16 per share in 2013 after hitting a low of 12 cents per share in 2011. The stock has returned 150% in the past year alone. Analysts believe the company is on its way back to being a solid name in the Internet space. In the last 12 months, management has reduced shares outstanding by 12.1%. Buy.”
- David R. Fried, The Buyback Letter Premium Portfolio, October 17, 2012