Web.com Group, Inc. (ASX:WEB) Growing Rapidly, But Expectations Still High

Web.com Group, Inc. (ASX:WEB) has been experiencing accelerated earnings and sales growth over the past five years.  Over that time frame the firm has seen earnings growth of 17.40% and sales growth of 12.90%.

Many investors may have noticed that when the stock market has been running bullishly hot for quite some time, market tops can be a very busy place. Trading interest may be noticeably higher when the good times are rolling. This can be tricky because often times, prices may become inflated and somewhat overvalued. Traders will need to pay much more attention to what is going on at the tops of these bull runs. When interest is heightened, traders who got in at much better prices may be looking to unload the winners for quick profits. Doing the proper research can help clear out some of the fog that comes with an oversaturated market. Chartists will most likely be paying attention to price moves and trying to spot the next series of trends that develop. Spotting a trend earlier than the crowd may help the trader sell before the big drop or buy before the big rise. Learning how opportunities unfold and present themselves in the stock market may take a lot of time and effort to master. Professional traders are typically a few moves ahead of the novice and relatively naive trader. Getting to that next level should be on the mind of any dedicated trader or investor. Learning from past mistakes can make a huge difference in the future of the trader’s profits and psyche.

While the firm has enjoyed the upward movement, it’s important to look at analyst expectations and where the company is headed from here.  On a consensus basis, analysts are projecting EPS growth of 5.62% for next year and have a $25.80 one year price target on the stock.   The stock recently traded at $27.90.

 Six Fundamental Characteristics of Great Growth Stocks

#6 Huge Mass Markets – The more potential customers there are, the greater the possibility that both the company, and the investment in said company, will be a success. 

#5 Market Dominance/Barriers to Entry – Look for companies who hold patents.  This is great barrier to entry, ensuring no competition.  Look for companies who dominate the market, blowing away the competition, though market dominance can be harder to measure. 

#4 Accelerating Earnings Growth – If a company’s earnings growth rate increases for two consecutive quarters, their growth is accelerating.  Faster growth is better growth, and a company whose earnings growth rate is accelerating is an attractive investment.

#3 Triple-Digit Revenue Growth – Companies growing their revenues at triple-digit rates (100% or better) are usually smaller and less known, making them attractive for buying by institutions. 

#2 High Profit Margins – In recent decades, high-margin stocks have beaten low-margin stocks by a huge amount. 

#1 Top Notch, Innovative Management – All great managers who led their companies to success usually did so by thinking differently.  There is no surefire and quick measurement of management talent.  When you find a top manager, one with a record of prior success and accolades, you should strike.  Top managers usually find a way to overcome obstacles. 

Let’s take a look at how the stock has been performing recently.  Over the past twelve months, Web.com Group, Inc. (ASX:WEB)‘s stock was 27.98%.  Over the last week of the month, it was -0.18%, 19.49% over the last quarter, and  41.62% for the past six months. 

Web.com Group, Inc. (ASX:WEB)’s EPS is 0.53.  Last year, their EPS growth was 673.60% while their EPS growth over the past five years is 17.40%.  Analysts are predicting Web.com Group, Inc.’s stock to grow 5.62% over the next year and 5.00% over the next five.

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