Stamps.com Inc (STMP)

[MWM]

Perhaps the happiest company in an otherwise unhappy month is Stamps.com (Nasdaq: STMP), which is seen as a likely beneficiary if the U.S. Postal Service decides to close many branches and cease Saturday operations altogether. The stock rallied nearly 40% in the past month on hopes more consumers would become aware of the company's online postal services.

Even before this potential catalyst, the business looked fairly healthy. Second-quarter sales grew 26% from a year earlier and per-share profits of $0.39 were far ahead of analysts' forecasts. Shares have responded in kind, moving up 100% from the 52-week low. To justify further gains, investors would need to see a clear path to even better results. And this appears to be precisely what investors can expect.

This is a fairly automated business model, and any revenue gains can flow quickly to the bottom line. For example, in the most recent quarter, sales rose $3.8 million sequentially while gross profits rose $3.3 million. Operating income rose $3 million quarter-to-quarter. This means more than 75% of the revenue gain went to the bottom line. This leverage helps explain why analysts expect sales to rise 15% this year to $99 million, but earnings per share (EPS) to rise 30% to $1.21. Shares trade for about 16 times projected 2011 profits, and this multiple could expand into the mid-20s if management can take advantage of the expected shrinkage at the U.S. Postal Service.

http://seekingalpha.com/article/295960-stocks-up-at-least-20-in-a-tanking-market?source=yahoo