Cramer’s Next Internet Stock Gapper (VCLK, OPWV, GOOG, MSFT, YHOO)

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On tonight’s MAD MONEY on CNBC, Jim Cramer reviewed ValueClick (NASDAQ:VCLK) as the next potential advertising company that could see a huge gain.  After Google (NASDAQ:GOOG) bought DoubleClick and after aQuantive was bought for a huge premium by Microsoft (NASDAQ:MSFT), this is the last of the independent Internet advertising stocks that should be acquired.  Cramer even thinks that Yahoo! (NASDAQ:YHOO) may need to acquire it.  Cramer came up with a figure that if DoubleClick and aQuantive revenue multiples were used with a 15% discount that you could see $59.67 or $34.00.  We had noted the same thing about 24/7 Real Media after Yahoo! acquired Right Media, and partially on the notion that ValueClick and aQuantive had once held merger talks.

If you are interested in Internet stocks that also may be taken over, we are getting ready to release our own internal "watch list" of small cap Internet stocks to subscribers of our Special Situation Investing Newsletter that we have kept private.  We do not believe theese are currently takeover targets, but under the right circumstances and prices these could all easily become subsidiaries of the current Internet giants.  Two companies that were acquired this year off that list this year were Web.com and 24/7 Real Media.

The Web.com buyout was one we had been calling for basically two-years before it happened, and they let things get south compared to when there was huge value.  Be careful on betting on major premiums just because of others.  We noted this specifically where 24/7 Real Media was giving itself away too cheaply.

One free peek on our list is OpenWave (NASDAQ:OPWV), although we think this one has worked itself into such a bind that a true buyout would be a "saving bid to scoop up on the cheap" after a major sell-off rather than a footrace with a major premium.

Jon Ogg
October 8, 2007

Jon Ogg produces the "Special Situation Investing Newsletter" and he does not own securities in the companies he covers.