CTC Media: Making Waves in Russia

| About: CTC Media, (CTCM)

Based in Russia, CTC Media (NASDAQ:CTCM) operates three television networks and now controls at least 15% of all Russian advertising dollars. But how do you play the stock?

CTCM is a huge player in Russia -- and Russia has become a significant player in the global media industry. The country is now the No. 6 ad market in Europe. All together, CTCM's three networks -- all-ages CTC, woman-centered Domashny and the hip DTV -- are only a little behind the state-controlled media for viewer share.

Fundamentals: CTCM seems valued at a discount with a PEG of 0.5378, one of the lowest in the global TV business. The company's growth is simply not being priced in. However, current PE is 37.7526, among the highest in the industry.

Based on gross, operating and net margin, CTCM converts a larger percentage of its revenues to profits than most other TV companies -- operating margin is a high 25.57%. CTCM uses little or no debt in its capital structure and may have less financial risk than the industry aggregate. CTCM pays an annual dividend of $1.28; at its current stock price, that provides a yield of 5.80%. About 39% of the float is held by institutions and short interest is only 2.08%.

The Technicals: Since hitting a 52-week high of $24.99 on November 2, CTCM has been moving down, breaking the T3 Tilson and closing below the 50-day moving average Tuesday. The ADR might be looking to base at its next support level in the mid-twenties and then channel shift its upward channel again -- similar to the shift that occurred around this time last year.

Bottom Line: Although CTCM seems to be discounted at this point, traders may want to wait and see where the price action shakes out before diving in.

Disclosure: None