Love Wins…Green Rules!

The Grexit is causing havoc in markets everywhere, especially Europe. The Chinese stock market is sinking fast. Now is the time for a macroeconomic stock ‘idea’!

The Supreme Court ruling on gay marriage is still a hot button issue even though it is nearly two weeks old. A popular sentiment from advocates is “Love Wins”. That’s fine, but we need to look at ways to make green somehow from this ruling. Businesses that ‘cater’ to what could be huge increase in the number of marriages across the country could reap huge financial benefits.

XO Group, Inc. (NYSE – XO - $15.46) provides consumer Internet multiplatform media services to the wedding, pregnancy and parenting, and nesting markets. It operates a network of Websites under various brands, such as The Knot, which offers wedding resources through wedding Website and mobile apps, national and local wedding magazines, and nationally published books; The Bump, a pregnancy and parenting brand that provides personalized information, content, and tools for anyone at any stage of their journey from fertility to pregnancy and parenting through the toddler years; and The Nest, which focuses on young nesters setting up homes and navigating new lives together. We see a spike in The Knot segment of the business here.

Below is the 1-year chart for XOXO which illustrates the stock is trading right at the 200-day EMA.

XOXO 1-Year Chart, 200-Day EMA

(Source: www.otcmarkets.com)

Another impressive technical indicator is a low short float percentage of 2.1%. Additionally the Company has no debt as of the end of Q1 21015. An operating margin of 11% is nearly twice the average of similar firms at 6% and signifies the Company is set to grow in an efficient manner and can still maximize EPS.

XOXO is solid play on what could be a spike in marriages nationwide with the Supreme Court ruling on same sex marriage. A forward P/E of 34 versus a trailing P/E of 151 is another positive growth sign. We think the stock gets to $19.25 sometime in Q4 this year.

Have a great day!

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