This $10 Momentum Stock Could Score Traders Double-Digit Profits

StreetAuthority Network

Recently, I was asked to name the two trends that I think will be the most critical for business during the next several years. While many ideas ran through my mind at the time, the two that kept rising to the top were social media and cloud marketing. 

These two cutting edge disciplines were barely in the vocabulary just a decade ago. Now, they have become critical factors for the success of many different types of businesses. 

What exactly are social media and cloud marketing?

Social media is the sharing of information among individuals and groups within virtual communities and networks. While not specifically developed for marketing, social media and the information gleaned from it have become crucial for many businesses.

Every business person knows the power of word-of-mouth advertising. Think of social media as word-of-mouth marketing on steroids. Not only does it provide the individual the power to express their opinion to a wide audience, it can provide mission critical data to marketers. Internet sites like Twitter, LinkedIn (LNKD) and Facebook (FB) are the leading social media companies. 

Cloud marketing is software controlled and managed offsite by a company that specializes in marketing. Cloud marketing is a way companies can outsource much of their marketing requirements to experts in the field. This enables companies to focus on what they do best, whatever that happens to be, and allow specialists to manage the marketing. 

My stock pick for today is a company that combines both of these business critical trends into a unified whole: Vocus (VOCS).

Vocus is a cloud marketing software company that specializes in helping companies maximize their social media presence and data flow. The software ties together digital marketing, social networks, search functions and publicity into a unified whole. Not to mention delivering real-time marketing opportunities in the form of prospects, leads, social media conversations, inbound inquiries and even curated content.

The company is based in Maryland and employs over 1,000 people to help businesses maximize their marketing efforts. The numbers are truly staggering. The company sent over 19 billion emails last year, annually refers 48 million visitors to customers' websites, and manages 4.5 trillion web impressions per year. The software is utilized by 120,000 organizations worldwide and is available in seven languages.

The company went public in 2005 and recently posted impressive first-quarter results. GAAP revenue came in at just over $46 million for the quarter, a 33% increase over the same quarter last year. VOCS is expecting revenue to be between $188 million and $189 million for 2013. 

Vocus' President and CEO commented on the first-quarter results, saying, "We have one of the fastest growing marketing clouds today, as bookings in the first quarter for the Vocus Marketing Suite grew 200% over the prior year. We remain focused on continuing our expansion beyond PR software into the much larger cloud marketing space which we believe will deliver the next phase of growth and success for Vocus."

The company did report an adjusted first-quarter loss per year of $0.06, exceeding Zacks estimate of $0.04. 

Following the April 23 earnings release, shares plunged from over $13 to a low of $8.05 in one day. This drop created a powerful buying opportunity for those traders savvy enough to pick up shares near the lows.

Taking a technical look at VOCS, the price has climbed from the lows into the mid-$10 area. It has broken above the 50-day simple moving average at $9.70, signaling a solid momentum buying opportunity right now. My 12-month target on this stock is $14, representing about a 36% gain from the current entry price. The initial stop-loss level should be the 50-day simple moving average.

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VOCS Stock Chart

I like VOCS right here due to the strong technical picture, relatively depressed stock price and solid forward guidance by management.

Recommended Trade Setup:

-- Buy VOCS at the market price
-- Set stop-loss at $9.70
-- Set initial price target at $14 for a potential 36% gain in 12 months

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