Marketing outfit shows value but triggers are tricky to find Webjet has enjoyed a staggering 33 per cent surge in its share price since raising $25 million to buy rival Zuji last December. STW Communications THE iconic advertising and marketing group remains part of a shrinking group of value stocks in Australia. Earlier this month the company reported a solid 6.5 per cent increase in earnings a share (EPS) for the year to December 31. Analysts are now forecasting STW (ASX code SGN) can earn 13¢ a share for the 2013 year and pay a fully franked dividend of close to 9¢ a share. This puts the stock on a price-earnings multiple (P/E) of 10.4 times and a fully franked yield of approximately 6.5 per cent. While the current valuation and circa 10 per cent earnings should give investors comfort it is more difficult to identify a catalyst to buy the stock. The first buy trigger could be a pick-up in marketing spend as 2013 unfolds following lower interest rates. Advertising lags other parts of the economy and can take up to a year to respond. A second opportunity to buy the stock could be the long-awaited sell-down by the group's major shareholder, global advertising outfit WPP. The UK-based WPP currently owns about 20 per cent of STW and with the recent uptick in the Australian sharemarket there is an increasing chance the stake could be sold. AtCor Medical Holdings AT THE micro end of the market one of the better results this season came from AtCor (ACG), a medical device company that specialises in early detection of cardiovascular disease. The company posted a half-yearly profit of $2.3 million, well ahead of forecasts. AtCor is highly unusual for an Australian medical development company with no blue sky embedded in the valuation. Refreshingly, the company has recently cut costs and states it will only ramp up expenditure when revenue is secured. This effectively means there will not be a major cash burn that is typically associated with other medical development outfits. AtCor has a market value of $14 million and net cash on the balance sheet of $2.1 million. The first-half profit was boosted by a $700,000 grant and analysts are expecting a break-even result for the second half. Despite this, it is only trading at about seven times earnings. The company supplies product for the clinical trials and research markets. Its devices measure central aortic blood pressure non-invasively for blood pressure and arterial stiffness. There have been a number of recent encouraging signs for AtCor, including the US approval of the new SphygmoCor System Excel device. Not only is the device a quantum improvement in terms of functionality but it has also been granted a reimbursement code for clinicians. The addressable market is estimated at $US100 million a year. On this segment alone the firm could easily be valued 50 per cent higher at 22¢ a share. Webjet Limited IT IS dangerous to stand in the way of a runaway bus, or on this occasion a jet plane. However, closely scrutinising the dynamics of a business and questioning the share price should be a daily occurrence when playing the sharemarket. Online booking group Webjet (WEB) has enjoyed a staggering 33 per cent surge in its share price since raising $25 million to buy rival Zuji last December. The acquisition was highly accretive given Webjet only paid 4.6 times earnings before interest, tax, depreciation and amortisation (EBITDA) for the Asian-based operation. There are some concerns and a lot of blue sky baked into the share price today. Webjet's traditional online business has slowed significantly over the course of the past year, and only price rises saved the group from anaemic growth in the December half. The price increases, though, did not disguise poor operating cash flow for the period and no explanation was given in the commentary. Not only has the company hit a poor cash flow period, it also continues to capitalise software costs and amortise them over 25 years, a strange decision given that software rarely lasts 25 years in any business. If we cost the software development the company is trading on a hefty 33 PE multiple and about 50 times current operating cash flow. If cash flows and earnings are disappointing at the June 30 results, it could be better to look elsewhere.