This bullish article takes a look at the wildly popular wedding-planning website, theknot.com (KNOT: sentiment, chart, options). Along with a website devoted to weddings, the company publishes regional wedding magazines in 18 markets around the country with a combined circulation of 1.2 million. They also publish a 670,000-circulation national magazine. The magazines and website work well together, as 70 percent of the traffic comes from magazine readers accessing the website and hearing about it, rather than from search engines. Along with theknot.com, KNOT has another website thenest.com, a site totally devoted to newlyweds. In addition to the website, the company publishes books and a magazine under The Nest brand name.
Contrarian Takeaway:
There's little doubt that when it comes to weddings, theknot.com is one place that nearly everyone stops. And given the recent price action, there's no doubt that its strategy is working. In fact, the shares have gained nearly 70 percent this year alone. Fundamentally the company is in great shape, growing very quickly. So technically and fundamentally, things are very solid. What about the sentiment? There are clear signs of skepticism, suggesting there's still a good deal of money left on the sidelines. First off, there are no options on KNOT, meaning this influential group has yet to put any of its money to work. Also, the shorts are all over this one, as nearly 12 percent of the float is sold short, more than enough to spark a short-covering rally on any good news. Finally, only two analysts cover the shares, leaving lots of room for positive initiations down the road. Add it up and I think this one is going higher.
Ryan Detrick CMT (rdetrick@sir-inc.com)
07-11-06
