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DailyTrends.com Small Cap Update: eDiets.com (DIET)

Chris Lahiji
Chris Lahiji
Daily Trends.com
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This is a stock that is certainly not in favor now, as everyone becomes rather gluttonous during the holiday season. The company runs a web site allows its nearly 225,000 clients to enter personal information and receive a customized, software-generated program to help them lose weight.

eDiets.com also offers support message boards, a newsletter service, nutrition advice from a panel of experts, vitamins and supplements, and anything else related to health loss. Chairman David Humble owns roughly 36% of eDiets.com.

eDiets has built strong barriers to entry with the diet depot strategy, growing average revenue per sub per cycle from $105 to $125 while lowering customer acquisition costs from $77 to $58 over the last 4 quarters.

The stock price is grossly undervalued in my opinion. eDiets is currently being valued at 1.6x this year's enterprise value to revenue and 1.3x next year's enterprise value to revenue. I think that the stock will earn .25 to .30 cents in EPS for FY2006 and ultimately be bought out at a much higher price within the next six to twelve months.

For full disclosure purposes, I am putting my money where my mouth is and own shares in the company.

Chris Lahiji will be available to take your questions until Monday, December 5. Please use the form below to submit your questions.

 
 
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