General Electric Leads List Of Possible Barron's Bouncers

Includes: AREX, GE, SBGI
by: Bret Jensen

Every week Barron's puts out a weekly periodical that is well read within the industry. Companies receiving positive profiles tend to jump in the early part of the next trading week. General Electric (NYSE:GE) leads this week's list of possible movers on Monday after positive write up's in this week's magazine.

General Electric was positively profiled within a piece stating it was not too big to grow and postulating the shares could appreciate 30% in two years in addition to generous dividend yield. Among the positives cited was that the company has the biggest backlog in its history and it has more exposure to emerging markets that any other American multi-national.

I also have a high opinion on the company's transformation. It has sold its media businesses and has greatly reduced its balance sheet and contribution from financing in recent years. The company is focused on becoming a more pure play industrial concern, which should lead to the company being awarded by a greater earnings multiple by the market.

GE pays a dividend yield of over three percent (3.2%) and has raised its dividend payout some 90% since emerging from the financial crisis. The company has bested bottom line expectations each of the last three quarters and is priced at just over 13x earnings, a discount to the ~16x forward earnings currently accorded the rest of the industrial sector.

Approach Resources (NASDAQ:AREX) is a small (under ~$1B in market capitalization) E & P concern with acreage in the Permian basin of Texas. The article advocated the shares have 50% upside as the market is putting a $5,000 an acre valuation on its controlled land when other sales in the area have gone for $17,000 an acre.

The article also cited the company's progress to having oil make up more of its overall production. Oil now accounts for 42% of its production, 28% of natural gas liquids with the rest made up of natural gas. Revenues are tracking to better than 40% gains in 2013 and analysts expect almost 50% growth in 2014. The shares currently fetch less than $25 a share while the mean analyst price target of the 17 analysts that cover the stock is $31.50 a share.

Smaller broadcaster stocks also got called out as the market seems to undervaluing the value of the spectrum holdings they hold. They should also continue to benefit from the Supreme Court "Citizens United" ruling which has unleashed a torrent of political spending. Finally, CBS Corporation's (NYSE:CBS) negotiating win versus Time Warner (TWC), showed the value of retransmission rights.

My favorite play among the myriad of broadcasters is Sinclair Broadcast Group (NASDAQ:SBGI). The article highlighted its spectrum holdings might be worth $36 a share, more than the ~$29 a share current price. Earnings are only tracking to just over $1 a share this fiscal year but that is projected to go to over $3 a share in FY2014. The shares also yield 2.1%.

Disclosure: I am long GE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.