Companies don’t like to lose – and this is especially true for rivals Microsoft and Google. They have institutional momentum pushing them forward to buy DoubleClick, but only one of them will get it. It doesn’t even matter which one, because the other will be ultra-committed to making another deal happen for the big payday that always comes with a successful acquisition, Cramer says. He believes Valueclick and aQuantive are the most likely targets for a consolation prize to whichever tech behemoth loses the DoubleClick deal.
But anyone who knows Cramer’s strict rules will know that this isn’t enough reason to go out and buy either VCLK or AQNT. And while Cramer says that Internet advertising is one of the greatest secular growth stories of our time, you’ve still got to look at these companies’ fundamentals. In this case, they happen to be quite good.
Both companies are reasonably priced: Valueclick trades at 4.12 times this year’s sales estimates with 22% sales growth. aQuantive trades at 3.85 times this year’s sales estimates with 50% sales growth. At these prices, Cramer sees some upside even if there isn’t a takeover in their future.
Bottom line: Cramer thinks the loser of the bidding war for DoubleClick – whether its Microsoft, Google or someone else – is likely to go after Valueclick or aQuantive. Either of these would go much higher on a takeover, but they are stocks that could hold their own even if they aren’t bought.
Questions? Comments? firstname.lastname@example.org