Fluent Inc Stock Already a Double, But More Gains Likely to Come

Fluent Inc Stock Already a Double, But More Gains Likely to Come
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Fluent Inc Stock Already Up a Sizzling 220% From 52-Week Low

Generally, I look for bargain stocks that either trade at attractive valuations or have been kicked to the curb by investors.

But sometimes I present stocks that have already made major moves.

That is the situation with small-cap online marketing company Fluent Inc (NASDAQ:FLNT), whose stock price is up a gigantic 220% from its 52-week low and up 74% this year.

FLNT stock traded at a 52-week high of $6.39 on April 9.

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While it would have been nice to have entered Fluent stock when it was below $2.00, my view is that the valuation remains reasonable and that the stock is worth a look on any price weakness.

Fluent Inc has been delivering strong revenue growth and there is likely more to come due to bullish tailwinds in the area of data-driven digital marketing solutions. After all, what company doesn’t need a sound digital marketing strategy?

A look at the FLNT stock chart displays the breakout at $2.50 in November 2018 and the subsequent rally to its current price level.

Chart courtesy of StockCharts.com

The sustained move in Fluent stock was driven by the emergence of a bullish golden cross formation. This occurs when the 50-day moving average breaks above the 200-day moving average—a technical confirmation of strong short-term buying.

Fluent shares subsequently broke $4.00 and marched above $6.00. But given this stock’s rapid rise, there is a high downside risk for a retrenchment, which I would view as an opportunity for aggressive traders.

My Bull Argument for FLNT Stock

A look at its revenue picture shows Fluent Inc growing its revenue in five consecutive years from a mere $3.0 million in 2014 to $250.3 million in 2018.

Fiscal Year Revenue (Millions) Growth
2014 $3.0
2015 $14.1 369.7%
2016 $186.8 1,226%
2017 $211.7 13.3%
2018 $250.3 18.2%

(Source: “Fluent, Inc. (FLNT),” Yahoo! Finance, last accessed April 12, 2019.)

While the massive revenue growth seen earlier is a thing of the past, Fluent is expected to ramp up its annual revenue by 15.1% to $288.0 million in 2019 and by 15.8% to $333.6 million in 2020. (Source: Ibid.)

Fluent is yet to produce positive earnings before interest, taxes, depreciation, and amortization (EBITDA), but the company’s financial results have been improving, with positive EBITDA perhaps by 2019.

Fluent Inc reported losses in five straight years prior to turning profitable after making $0.04 per diluted share in 2018.

The company is estimated to ramp up its earnings picture with profits of $0.19 per diluted share in 2019 and $0.39 per diluted share in 2020. (Source: Ibid.)

Moreover, Fluent generated positive free cash flow in 2016 and 2017.

Analyst Take

In my view, Fluent Inc appears to be set for bigger gains down the road as the demand for digital marketing grows.

Even with FLNT stock more than doubling over the past year, the valuation still looks reasonable. There could be some bumps along the way, but the prospects are bullish.

Consider that Fluent stock trades at a reasonable 16.05 times its 2020 earnings per share and has a cheap price/earnings-to-growth (PEG) ratio of 0.79. That means this stock trades below its estimated earnings growth rate.