I follow many Internet companies and track the sector quite carefully looking for investments. Presently, there aren’t many Internet companies, that can be characterized as value investments, unless one is prepared to make heroic, and to quote Barry Diller, “mathematically insane”, assumptions. That is why I am amazed at the compelling investment opportunity still offered by Incredimail (MAIL) (Current Price: $7.65).

As many readers know, I’ve followed MAIL for quite some time, having first written about it back in 2008, at a little over $3 per share and wrote up a new summary in early January 2011, when the stock was trading at $8 per share.

So what’s new at MAIL? The company reported Q1 earnings today that significantly exceeded expectations. Revenue increased 24% year-over-year and earnings grew by 26% to $0.29 per share.

What’s interesting is that despite the renewed growth and the good future prospects the stock’s valuation seems more in line with a cyclical company, rather than an innovative, pure-play, Internet company. In other words, the stock is priced for a disaster, which seems highly improbable.

In fact, the company has already survived it’s worst nightmare: the potential loss of Google. But the Google deal was renewed and with today’s numbers it’s apparent that the terms of the Google deal are perfectly suitable for MAIL financially. So with the Google risk now completely eliminated, I think that even using conservative estimates for free cash-flow in the coming year, there is apparently at least 50% upside in the stock price. However, if one considers the valuations afforded to less well positioned or experienced private Internet companies, I believe the upside for MAIL, to be at well over 100%.

As long as the company continues to execute and does not make any silly acquisitions, at some point investors will rediscover the stock and price could rise quite rapidly.

Disclosure: Affiliates of Envoy Global Research, and its principals, own shares in MAIL. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.