A Look @ Small Cap Digital Advertisers

Steve Kanaval |

Online_Marketing.jpgRocket Fuel, Sizmek and YuMe

I notice that nearly all writers cover companies like Tesla Motors Inc ($TSLA), Apple Inc ($AAPL) and Facebook Inc. ($FB), yet the reality is that very few readers invest, trade or have these stocks in their portfolio. Even though these stocks are constantly in the news cycle, many investors and market watchers are looking for smaller companies – many of which are not even public companies. That’s why I’m going to explore some smaller companies, and give readers an unbiased view of stocks you will not find in the normal news cycle.

Keep in mind, I am not paid by these companies nor do I have investment in any of them. I think the reader needs some perspective and identification of the undiscovered, the stocks that Wall Street doesn’t cover because they don’t require financial services from a broker or any other banking help. Here are a few of them:

Sector: Small Cap Advertisers

Rocket Fuel Inc. ($FUEL): $375M Market Cap /Ave Vol 750K

Rocket Fuel Inc., a technology company, provides artificial intelligence digital advertising solutions. The company’s artificial intelligence-driven technology platform is built on its real-time optimization engine, which leverages Big Data and its computational infrastructure to purchase and deliver highly-automated digital advertising campaigns. It offers direct response solutions, brand objectives, as well as brand assurance and insights.

Analysis: Shares of Rocket Fuel have been trading lower since 2013 and announced layoffs last week in which 11% of its workforce was cut, raising questions about the viability of digital marketing platforms.  The honeymoon is over for the sector, and a consolidation is likely. Salespeople and executives can talk about new media marketing and utilizing platforms to be a better digital marketer, but in 2015, companies like Rocket Fuel will need to prove that they can make money.

Sizmek ($SZMK): $225M Market Cap /Ave Vol 100K

Sizmek has an end-to-end solution for planning, delivery, measurement, and optimization of online media campaigns. The company's online campaign management product includes creative authoring, which provide creative designers and producers with tools and services to manage a campaign's creative development lifecycle. This includes factors like initial design, inclusion of interactive features, and adaptation for analytics and ad insertion, as well as integration with campaign management and ad serving processes.

Analysis: Sizmek shares turned higher last year, and shares seemed to bottom in Feb 2015 after releasing earning results for Q4 2014. The company looks like it has solidified market share, and their CEO Neil Nguyen summed it up back in February when he said "We ended an important year for Sizmek posting a solid quarter, with our core products growing 24% and now representing over three quarters of the Company's total revenues. At the same time pro forma adjusted EBITDA grew significantly even as we invested to increase our platform functionality and expand our product suite."

YuMe ($YUME) $175M Market Cap /Ave Vol 100K

YuMe, Inc. provides digital video brand advertising solutions in the United States and internationally. The company’s proprietary technologies serve the needs of brand advertisers and enable them to find and target audiences across a range of Internet-connected devices and digital media properties. It offers software solutions to monetize professionally-produced content and applications for digital media properties. The company enables digital video advertising by matching relevant audiences available through its digital media property partners with appropriate advertising campaigns from its advertising customers.

Analysis: Much like Rocket Fuel above, shares of YuMe have been trading lower for more than a year. It is critical for these smaller companies to stabilize share prices so they can utilize shares as currency and avoid layoffs and flag company growth. One of the keys for this sector is that creative employees not jump ship and stay with the company for the long haul. This is not happening for YuMe. I would point to upcoming May financials before drawing any conclusions for shares in YuMe.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
TSLA Tesla Motors Inc. 181.47 -0.41 -0.23 4,042,324
FB Facebook Inc. 115.40 0.30 0.26 25,070,364
AAPL Apple Inc. 109.90 0.41 0.37 26,527,997
SZMK Sizmek Inc n/a n/a n/a 0
YUME YuMe Inc. 3.50 0.06 1.74 90,536
FUEL Rocket Fuel Inc. 1.75 0.04 2.34 407,764

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