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Constant Contact: Groupon Without The Accounting Follies
By: Covestor.com   Monday, April 2, 2012 6:25 PM
And it's also inevitable that SaveLocal features will be copied by other marketing services vendors, perhaps even by Groupon itself, which is why this doesn't necessarily make Constant Contact a screaming buy.

But Constant Contact should certainly have the stage to itself for a few months, as merchants interested in daily deals (but unwilling to pay tribute to Groupon) finally have a savior.

A lot of people think that email marketing is doomed because email is doomed. Too many people are tweeting or texting each other now, or posting updates to Facebook. But size limitations of the former, and privacy issues related to the latter still leave plenty of room for POEMs ("Plain Old EMails").

So what's the trade here? Easy: Constant Contact has empowered merchants in a way that Groupon hasn't, and probably never will. Constant Contact is consistently profitable, has 20% operating cash flow margins, rising ARPUs, a predictable SaaS-based subscription business model, and a recent history of exceeding quarterly earnings estimates. It has a market cap of $880 million.

The only one of those attributes Groupon has is a market cap. It's $9.5 billion.

I'm sorry, but did somebody say, "pair trade?"

Thank you!  I'll be here all week.

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

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