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E-Mailbag Monday: Toys 'R' Us, Varsitybooks.com, CMGI B2B Fund

What do you think of the brick-and-mortar Toys 'R' Us?

Reply:It seems that most investors think Toys 'R' Us (TOY) is hopeless. In fact, the stock is selling close to its 52-week low of $13-1/8. Of course, the company missed out on the online boom for Christmas last year. As for this year, there was still more turmoil.

However, from a pure value play, the stock looks extremely cheap. The price-earnings ratio is a rock-bottom 10.8 (not often that I write about P-E ratios). Also, it appears that the Toys 'R' Us site got tremendous traffic -- despite some customer service snafus. Actually, the stock may have a short-term pop as sales reports are released. What's more, I think there's a strong possibility of a spin-off of the Net assets.

Varsitybooks.com: The IPO

I have purchased books off of Varsitybooks.com and like it a lot. What do you think about the company?

Reply: I wish I had this when I was going to school. I do not like waiting in lines, nor paying lots of money for books (especially when you are a starving student). Varsitybooks.com is a great site. According to MediaMetrix, Varsitybooks.com is the most visited college-oriented site. The company builds its base of users with innovative marketing methods, such as the use of student reps.

The college market is big, with over 15 million students. The biggest school-related expenditure is textbooks (excluding tuition, room and board). Of course, 95 percent of students are on the Net (spending about seven hours each week). All in all, I think this could be a good IPO.

Getting on the CMGI B2B Bandwagon

Can you provide me with the information needed to buy into the newly established B2B fund by CMGI?

Reply: Actually, there is no way to directly purchase shares in the fund. Rather, the fund will be part of the fast-growing CMGI (CMGI) . And, as I wrote in my Top 10 Picks for the Millenium, CMGI is a great way to play the Net for 2000. Although, CMGI may decide to spin-off the B2B fund to investors.


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