DailyTrends.com Small Cap Update: eDiets.com (DIET)

	Chris Lahiji Daily Trends.com
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This is a stock that is certainly not in favor now, as everyone becomes rather gluttonous during the holiday season. The company runs a web site allows its nearly 225,000 clients to enter personal information and receive a customized, software-generated program to help them lose weight.

eDiets.com also offers support message boards, a newsletter service, nutrition advice from a panel of experts, vitamins and supplements, and anything else related to health loss. Chairman David Humble owns roughly 36% of eDiets.com.

eDiets has built strong barriers to entry with the diet depot strategy, growing average revenue per sub per cycle from $105 to $125 while lowering customer acquisition costs from $77 to $58 over the last 4 quarters.

The stock price is grossly undervalued in my opinion. eDiets is currently being valued at 1.6x this year's enterprise value to revenue and 1.3x next year's enterprise value to revenue. I think that the stock will earn .25 to .30 cents in EPS for FY2006 and ultimately be bought out at a much higher price within the next six to twelve months.

For full disclosure purposes, I am putting my money where my mouth is and own shares in the company.

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