Lamar Advertising -- In Your Dreams!

Jan.12.07 | About: Lamar Advertising (LAMR)

Cramer was buying Lamar Advertising Company (NASDAQ:LAMR) this morning and the stock went nuts so we sold (sorry Jimbo) the Feb $70 puts for $1.40, already $1.75!

We went bearish on Lamar BECAUSE of Cramer.

That company does not and will not make enough money to justify this cap! Yes, they are growing fast -- their P/E will drop from 175 (not a typo) all the way down to 100 next year! Whoa -- let's back up the truck and do a 'mon back on a stock that has a NTA (net tangible assets) of -$550M and $1.8B in debt with no cash ($7M) and only $171M in receivables on $1B in revenues that will generate a whopping 50M (maybe) in profits this year!

How much would you pay for this dream company?

Cramer says $7B is too cheap! He says someone is going to swoop in and snap this "value play" up because nothing says lovin' like someone digging down deep and piling an additional $7B in debt on top of the $1.8B of existing debt in order to buy this gold mine. The interest on $8.8B in debt at 6% ($524M a year) would be more money than this company has ever made and also more money than it is likely to make in the next 5 years. Boo Yah!