I still believe this one is going to improve. Media and entertainment businesses are always risky, but I believe in CEO Bob Sillerman, who has already revolutionized the radio and the concert businesses. I think he has the right idea to build the company around a few phenomenally recognizable brands, (heard of American Idol? Heard of Elvis Presley?) and to leverage those brands through his other holdings.
Anyone who follows the film industry knows the 80/20 model prevails there -- that is, 20% of movies make a lot of money and pay for the 80% that don't. The same thing is happening in the book industry. It's the nature of media today, and I think Sillerman understands this dynamic as well as anyone. He also understands that "content is king" -- it's what his company name stands for -- and that in a rapidly-shifting world of delivery options (Netflix? Movies on demand? iTunes on your cell phone?), if you control the content, you'll make money no matter how it's delivered.
And in the meantime, Sillerman keeps hustling -- he's still working to come up with a new reality show, expand the "American Idol" franchise, and cross-promote his vast holdings.
For now, revenues for the first three quarters of 2006 are 50% higher than the whole of 2005, and his operating income keeps growing as well. I may have been wrong about how quickly this would grow, but I still think it's going to be a winner.
Type of stock: A media conglomerate based on a few large brands -- including the legendary Elvis Presley -- run by legendary media mogul Bob Sillerman.
Price target: I still think this one is going to make you big returns on your money. At $14 now, the stock can still hit $50 by the end of 2007. I am betting on Elvis and I am betting on the track record of one of the best entrepreneurs and operators in the country.
Disclosure: Author is long CKXE
CKXE 1-yr chart: