Background: ExactTarget, Inc. is a provider of on-demand email marketing software solutions. Their suite of on-demand one-to-one marketing applications enables clients to send business-critical and event-triggered communications to increase sales, optimize marketing investments, and strengthen customer relationships. They offer four editions of their on-demand software application along with integrated solutions such as ExactTarget for AppExchange and ExactTarget for Microsoft Dynamics CRM.

Why GEO Investing chose to delve into this story: We have begun to see the hot Service-as-a-Software industry glean some investor attention, as well as possess valuations that make companies in this industry prime take-over candidates, prompting us to screen for companies with SaaS or Saas-like characteristics. Our analysis of Enterprise Value to Sales ratios help to solidify our opinions and prompted us to look further into the company’s story.

Action Steps: Go long shares ET at $22.00 per share on January 15, 2013

Results: A $10,000 long investment in ExactTarget, Inc. (ET) resulted in $5,300, or a peak return of 53% at the company’s buyout price of $33.75.