The clamor for Internet service supplier stocks is masking a remarkable turnaround for publicly traded telemarketing companies.
Less than 18 months removed from a time when the sector was plagued by excess capacity, unmet analyst expectations and an uncertain future, telemarketing has quietly recorded an average stock price gain of 72% over the past year. The sector is also showing signs of further strong returns as it benefits from demand for services by, of all things, Internet companies that initially were supposed to spell phone marketers’ demise.
Rather than surrender, however, many telemarketers have redirected their assets. They’re now serving both the traditional users of outsourced call centers as well as e-commerce companies that possess no infrastructure and are thus unable to handle customer service as well as they might.
Indeed, firms like APAC Teleservices, ICT and Precision Response have positioned themselves as customer service sources for e-marketers, and are gaining increased business from the electronic channel.
As a result, all but one of the 10 telemarketing companies tracked by Gruppo, Levey & Co.’s DM Index recorded a gain in share price, and seven of the 10 outperformed the overall market.
Just as impressive – given the heights to which Internet fervor has propelled the average price of direct marketing service supplier issues – four of the 10 telemarketers outgained typical DM suppliers.
Over the 12 months ended Sept. 30, the 35 marketing services stocks in the DM Index increased in price an average of 169%, and recorded a median gain of 66%. Excluding the lackluster printing sector, the average supplier’s stock gained more than 189% in the last year.
DM service companies outperformed the market virtually across the board. During the same period the Standard & Poor’s 500 gained slightly more than 26%.
Overall, the price per share of more than two-thirds of DM suppliers increased by better than the market average. Less than 25% of those companies recorded a price decrease in the last year.
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