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Bull of the Day

Now's the time to take a look at Stamps.com Inc. (STMP - Snapshot Report). This Zacks Rank #1 (Strong Buy) is positioned to win additional business as post office services get pared back.

Stamps.com is one of the few "dot-com" companies left over from the dot-com era. Founded in 1996, it provides online postage services to about 465,000 registered customers. It targets small businesses, who have historically used the Post Office's postal meters for shipping.

Stamps.com software, which is an approved partner of the US Postal Service, allows businesses to print postage with just a PC, a printer and an Internet connection.

A Record First Quarter

On Apr 24, Stamps.com reported record first quarter results as it crushed the Zacks Consensus by 48.5%. Earnings were 49 cents compared to the Zacks Consensus of 33 cents.

Revenue jumped 13% to $32.1 million with core PC postage revenue rising 16% year over year. The company had its highest level of total paid customers ever at 465,000. It also added the most ever in one quarter, at 30,000.

Raised Guidance

After the record first quarter, Stamps.com raised its revenue and EPS guidance ranges. The analysts followed suit as the 2013 Zacks Consensus Estimate rose to $1.76 from $1.60 in the last month.

That is earnings growth of 19.9% compared to last year. Analysts also see another 8% earnings growth in 2014.

Stamps.com is sitting in the driver's seat. With millions of small businesses with shipping and mail needs, Stamps.com is well positioned to pick up additional customers as the Post Office pares back its services over the next several years.

Additionally, the next generation of business owners is more comfortable with digital services, in general. The market for online mail services is large.

At New Highs

With the stock market rally continuing, it's not surprising that shares of Stamps.com are at new 2-year highs.

But valuations aren't excessive. It's trading with a forward P/E of 20.9. With the double digit earnings growth, it has a PEG ratio of about 1.0.

Stamps.com is one of those companies many investors have heard of, and maybe even owned during the dot-com boom years, but have lost track of. It's time to delve back into it.

For investors looking for a small cap with big growth, Stamps.com is one to keep an eye on.

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

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