Ventas to Buy Sunrise Senior Housing REIT for $1.8 Billion
Healthcare REIT Ventas Inc. will enter the Canadian senior housing market by acquiring the Toronto-based Sunrise Senior Living REIT for approximately $1.8 billion in cash and debt. The price amounts to about C$15 per unit, a 35.7% premium over the units' Friday close. Sunrise units rose 35% to C$14.90 on the news yesterday. The buyout includes 74 private communities in desirable metropolitan areas in the U.S. and Canada that collectively house 7,000 residents. Canada has one of the oldest populations in the Americas (about 13% are over 65 versus 12.4% in the U.S. and 5.5% in Mexico). Ventas expects the communities to increase revenue from private pay assets to about two-thirds of total revenue. Total revenue from the communities is forecast at around $387 million in 2007, with net operating income of about $132 million. With the purchase, Ventas has also acquired exclusive right of first offer for other new assets in Canada and parts of the U.S. The transaction is expected to close in Q2.
• Sources: Bloomberg, MarketWatch, MoneyCentral
• Related commentary: Real Estate Investment Trusts: Rent or Buy?, New REIT ETFs Open Up Lucrative World of Commercial Mortgages, Eye on Health Care REIT, REIT ETFs - Comparative Analysis
• Potentially impacted stocks and ETFs: Ventas Inc. (NYSE:VTR), Sunrise Senior Living Inc. (SRZ). Competitors: Health Care Property Investors Inc. (NYSE:HCP), Healthcare Realty Trust Inc. (NYSE:HR), Nationwide Health Properties Inc. (NYSE:NHP), Manor Care Inc. (HCR). ETFs: Vanguard Small Cap Value ETF (NYSEARCA:VBR), Vanguard Small Cap ETF (NYSEARCA:VB)
TECHNOLOGY AND INTERNET
LG.Philips Reports Big Q4 Loss Due to Falling LCD TV Prices
LG.Philips had a rough Q4 (ended Dec. 31) as LCD TV prices fell 33%, resulting in a loss of 174 billion won ($186 million), versus a 328b won profit in Q4'05. Sales were up 3.4% to 3.07 trillion won ($3.3b). Analysts surveyed by Bloomberg expected a loss of 158b won on revenue of 3.25t won. This is LG.Philips' third-straight quarterly loss and may not be its last since it said it expects to return to profitability by Q3. Its shares could face further downward pressure after falling 35% last year (it traded up 1% to 29,200 won before announcing earnings), the most among its largest rivals. It expects LCD TV prices to drop by a "low teens" percentage in the current quarter ending in March. Last Friday, rival Samsung reported a 24% decline in profit from LCDs due to falling prices. Leading plasma TV manufacturer Matsushita could emerge as a partner, replacing Philips, which has announced its intention to sell its 33% stake. In the meantime, LG.Philips continues to cut spending as losses grow, despite further investment by rivals. LG.Philips and other LCD makers face ongoing allegations of price fixing.
• Sources: Earnings press release, Bloomberg
• Related commentary: iSuppli: More LCD Pain On The Way, LCD Revenues Down in 2006 Despite Unit Sales Being Up 29%, LG.Philips Being Investigated in Three Countries for Anticompetitive Practices, More Red Ink for LG.Philips in Q3 on Flat Panel Weakness
• Potentially impacted stocks and ETFs: LG.Philips LCD (NYSE:LPL). Supplier: Corning (NYSE:GLW). Competitors: AU Optronics (NYSE:AUO), Matsushita Electric (NYSE:MC), Sharp (OTCPK:SHCAY), Sony (NYSE:SNE), Toshiba (OTCPK:TOSBF), Sanyo (OTC:SANYY)
Google, Yahoo Up U.S. Web Search Market Share
Google added 0.4% to its share of the U.S. Web search market to reach 47.4% in December while No. 2 Yahoo also inched up 0.3% to 28.5%. comScore Networks, a Web audience measurement firm, also indicated that third-ranked Microsoft lost 0.5% to 10.5% while IAC/InterActiveCorp's Ask.com lost 0.1% to 5.4%. Google has gained share in 16 of the past 17 months. Approximately 6.7 billion searches were conducted by U.S. Web users in December, 30% more than in December 2005. On Google sites, 3.2 billion searches were conducted, and 1.9 billion on Yahoo.
• Sources: Reuters, News.com, ZDNet, ComScore Press Release
• Related commentary: The Online Search Industry: Predictions for 2007, Goldman Raises Google Forecast, Google's Dominance Is More Than Half Over, Jack Biddle on Google's Impending Collapse, Google To Hit $630, Fueled By Non-Search Assets - Jaffray, Don't Like Google's Capitalist Pursuits? Try 'Yahooing' Instead, Google's 70% Market Share: The Bad News, Ask.com: The Little Search Engine That Could (Topple Google?), Yahoo! Aims for Lead in Mobile Search Space, Is Yahoo Go a No Go?. Conference call transcripts: Yahoo: Q3 2006 (Oct 17th, 2006), Google: Q3 2006 (Oct 19th, 2006)
• Potentially impacted stocks and ETFs: Google, Inc. (NASDAQ:GOOG), Yahoo! Inc. (NASDAQ:YHOO). Competitors: IAC/InterActiveCorp. (IACI), Microsoft Inc. (NASDAQ:MSFT). ETFs: Internet HOLDRs (NYSE:HHH), First Trust Dow Jones Internet Index (NYSEARCA:FDN), First Trust IPOX-100 Index (NYSEARCA:FPX), iShares S&P Global Technology (NYSEARCA:IXN)
AOL Offers $900 Million for Swedish Online Ad Firm
Randy Falco, AOL's new CEO, made his first strategic acquisition move with an offer to buy Swedish internet marketing company TradeDoubler for 6.3 billion Swedish kronor ($900 million). The offer is 215 Swedish kronor/share, or 8.6% over TradeDoubler's January 12th closing price and 20% above its 3-month moving average. TradeDoubler connects advertisers with online media owners. Initially, the Swedish company's board and major shareholders agreed to the deal. However, the Swedish pension group Alecta, which owns 10% of the company, protested the offer claiming it is an undervaluation of the company. The acquisition would expand AOL's European online advertising reach, as part of its company-wide shift to ad-based revenue. Analysts are pleased with the move but agree with Alecta that the offer might be too cheap. AOL valued the company at 27 times future earnings, but its competitors trade closer to 30 times.
• Sources: NYTimes, Reuters, Bloomberg, MarketWatch.com
• Related commentary: Time Warner’s AOL: To Sell or Not to Sell?, A New AOL Chief: Be Afraid, Time Warner Discusses AOL and Online Ad Revenue Growth Conference call transcripts: Time Warner Q3 2006 Earnings
• Potentially impacted stocks and ETFs: Time Warner (NYSE:TWX) Competitors: News Corporation (NASDAQ:NWS), Viacom (NYSE:VIA), Disney Corp. (NYSE:DIS) • ETFs: Internet HOLDRS (HHH), PowerShares Dynamic Large Cap Growth (NYSEARCA:PWB), Vanguard Consumer Discretionary VIPERs (NYSEARCA:VCR), Consumer Discretionary SPDR (NYSEARCA:XLY)
Coming Soon to Your PC: Netflix Movies
In an effort to offset threats to its DVD-by-mail service, Netflix will begin sending movies and TV shows directly to subscribers' PCs -- for free. The images will be transmitted as streaming video. Netflix plans to roll out "Watch Now" to about 250,000 subscribers per week through June. The new offering only works on computers equipped with high-speed Internet connections and Microsoft's Windows OS, so it can't be used on cell phones, TVs, video iPods, or Apple computers. Still, it will give Netflix a strategic advantage over Blockbuster, which also offers an online DVD rental service. Though Netflix had enough muscle to elbow behemoth Wal-Mart out of the space in 2005 and is forecast to have made about $44 million last year, its stock price has plummeted over 40% over the past three years on fears the company will be unable to avoid built-in obsolescence. Watch Now will compete with Apple's iTunes, Amazon's Unbox, MovieLink, CinemaNow, and V-o-D services from cable companies -- none of which offer the service for free.
• Sources: Netflix press release, New York Times, LA Times, Newsday, MoneyCentral
• Related commentary: Netflix Announces New Video Streaming Service, Blockbuster Gaining Over Netflix?, Blockbuster Soars, Netflix Running Out of Steam, Blockbuster vs. Netflix: Playing the Online DVD Rental Market, Netflix Faces These Six Challenges. Conference call transcripts: Q3 2006 (Oct 23rd, 2006)
• Potentially impacted stocks: Netflix, Inc. (NASDAQ:NFLX). Competitors: Apple, Inc. (NASDAQ:AAPL), Amazon.com Inc. (NASDAQ:AMZN), Blockbuster Inc. (BBI), Hastings Entertainment Inc. (NASDAQ:HAST), Movie Gallery Inc. (MOVI)
Arris Group Snaps Up Tandberg TV, Becomes 'Triple-Play' Threat
In a move that will give it 25% of the global video processing market, Arris Group Inc. agreed to buy Norway's Tandberg Television ASA for $1.2 billion. The timing of the acquisition, which comes as phone companies upgrade their networks to accommodate the growing digital TV market, makes Arris a 'triple-play' threat by offering customers video, data and telephony solutions over the same channel. Tandberg is currently the world's largest producer of video-encoding systems used for Internet and high-definition TV; Arris offered Tandberg shareholders a 12% premium over the company's current stock price. Shares rose 13% in Oslo as a result. Among those expected to face a challenge by Arris' latest move: Motorola and Cisco, both of whom have recently made plays to enter the global triple-play market.
• Sources: Press Release, Bloomberg, Reuters, Washington Post
• Related commentary: Arris Snaps Up Tandberg TV, Cramer's Take on ARRS
• Potentially impacted stocks and ETFs: Arris Group (NASDAQ:ARRS). Competitors: Cisco (NASDAQ:CSCO), Motorola (MOT), Ericsson (NASDAQ:ERIC), Alcatel-Lucent (ALU). ETFs: iShares Goldman Sachs Networking (NYSEARCA:IGN), Internet Architecture HOLDRS (NYSE:IAH)
ENERGY AND MATERIALS
BP: Trouble On Two Shores
BP is currently suffering setbacks in both the U.S. and Russia. BP's $6.15 billion investment in the Russian joint venture TNK-PK is in jeopardy as state-controlled Russian oil companies Gazprom and Rosneft are pressuring BP to sell out its majority stake in the deal. TNK-BP has 10.5 billion barrels of reserves, provides about a quarter of BP’s production. It brings in 15%of BP’s net income. Analysts assume that the Russian government is attempting to shore up control over natural resources. In the U.S., a panel set up to investigate the 2005 Texas oil refinery explosion will release its report today and announced that it will be critical of BP management that ignored safety warnings by lower-level employees. The report is expected to support the prosecution in the lawsuit brought on behalf of those who were killed or injured in the blast. The report chastises BP management for "systemic failures". In other BP news, CEO John Browne, announced his retirement last Friday.
• Sources: NYTimes, Bloomberg, Financial Times
• Related commentary: With So Much Negativity, BP's Worth a Look, Fuel For Thought: Which Integrated Oil Company Should You Own?, 2007 Energy Investment Strategy: Pick the Laggards, BP Under Investigation -- Again
• Potentially impacted stocks and ETFs: BP plc (NYSE:BP) ETFs: BLDRS Europe 100 ADR Index (NASDAQ:ADRU), iShares NYSE Composite Index (NYSEARCA:NYC)
Oil Hovers Around $52 on Prospect of Emergency OPEC Meeting
Crude ticked down to $52.32 a barrel in after-hours trading as OPEC ministers dithered on the need for a further production cut to halt a 14% slide in the oil price since the beginning of the year. Several factors that usually support the oil price -- violence in Nigeria, for example, and whispers of continuing OPEC cuts -- are failing this time to counter bearish sentiment bolstered by mild temperatures and the momentum effect of hedge funds taking short positions. The U.S. Northeast, which accounts for about 80% of U.S. heating oil consumption, has just been hit with a cold snap, but inventories are high enough to prevent much impact on the oil price. If OPEC does announce a third cut, the price of oil will likely rise, but skepticism about enforcement would weaken price support. Nigerian Oil Minister Edmund Daukoru said yesterday that though the oil market is oversupplied OPEC should wait until February before deciding on a third cut, because the second cut -- which is supposed to shave output by 1.7 million barrels a day -- will not take effect until then. Kuwait's oil minister made similar comments on Monday, but Venezuela is pushing hard for an emergency meeting. Iran has also come out in favor of an additional output cut.
• Sources: Bloomberg (I, II), Reuters, Wall Street Journal, Forbes, Business Week
• Related commentary: The Big Picture on Oil Prices, Oil: On Its Last Legs, Oil at $35 a Barrel? It Could Happen to You, Oil Plunge: There's a Downside Too, Crude Oil Price Is Falling: How Do You Like Them Apples?, Oil Approaches 19-Month Low; Dow Sets Record, Panic in the Crude Pits, What's Driving Oil Prices Down?, Oil Price Long Term Outlook
• Potentially impacted stocks and ETFs: Exxon Mobil Corp. (NYSE:XOM), BP plc (BP), Royal Dutch Shell (NYSE:RDS.A), Chevron Corp. (NYSE:CVX), Marathon Oil (NYSE:MRO). ETFs: Oil Service HOLDRs Trust (NYSEARCA:OIH), United States Oil Fund LP (NYSEARCA:USO), PowerShares DB Oil (NYSEARCA:DBO), iShares Dow Jones U.S. Oil & Gas Exploration Index (NYSEARCA:IEO)
AEROSPACE AND DEFENSE
GE to Buy Aerospace Arm of Smiths Group for $4.8 Billion
In a bid to capitalize on record-setting new plane orders and continued strong U.S. military spending, GE will buy the aerospace unit of Britain's Smiths Group for $4.8 billion in cash. Smiths is a secondary supplier of landing-gear parts, propellers and other components to clients including Boeing and Lockheed Martin. Smiths shares closed up 11.7% in London trading on the news. GE has also signed a letter of intent with Smiths to form an airport security JV. GE's current aviation business is focused primarily on engines, but the acquisition will enable the company to offer its customers flight management and airborne platform computing systems as well. Smiths is thus providing GE with a "technology growth platform" that the company expects to be accretive to net income. Smiths, which posted revenue of $2.4 billion in 2006, has suffered from mushrooming development costs for new projects from Boeing and Airbus. The deal will "crystallize" shareholder value, generate improved ROC and improve margins for Smiths, which will be left with detection, medical and specialty engineering businesses.
• Sources: MarketWatch, Bloomberg, Wall Street Journal, USA Today
• Related commentary: Boeing Could Nab Another $10b in Sales Before Year-end, GE to Buy Vetco's Oil & Gas Unit for $1.9 Billion, How Will GE Spend Its Plastics Units Proceeds?, Howling At The Moon: Dogs and Flying Five 2007 Stock Picks, Microsoft, GE, Intel Garner Most 2007 'Buy' Recommendations, GE and Citigroup Rallies: How Wall St. Missed It Conference call transcripts: Q3 2006 (October 13, 2006)
• Potentially impacted stocks and ETFs: General Electric Co. (NYSE:GE). Competitors: Citigroup Inc. (NYSE:C), Koninklijke Philips Electronics NV (NYSE:PHG), Siemens AG (SI). ETFs: WisdomTree High-Yielding Equity (NYSEARCA:DHS), WisdomTree LargeCap Dividend (NYSEARCA:DLN), WisdomTree Total Dividend (NYSEARCA:DTD), streetTRACKS DJ Wilshire Large Cap (ELR)
Pfizer CEO Kindler Set To Overhaul Budget
A relative outsider to Pfizer, the company's new CEO Jeffrey B. Kindler previously practiced law and has never sat on a corporate board before. But in less than a year on the job, he has earned high marks from Pfizer's board for his willingness to make deep spending cuts and his unconventional views of how to run one of the world's top pharma companies. Monday, Kindler is expected to announce a drastic overhaul of Pfizer's budget during a conference call with analysts, though the company has been tight-lipped as to the form such cuts may take. After already cutting its U.S. sales team by 20% in November, it is felt Pfizer's European team can expect more of the same. "There will be facilities closures," according to someone with knowledge of the situation.
• Sources: Wall Street Journal, Forbes
• Related commentary: Pfizer's Sales Force Cut: Like 'The End of an Arms Race', Pfizer Trading Well Below Its Intrinsic Value, Pfizer Investors to Suffer from Halting of Lipitor Replacement; Big M&A to Come?, Searching for Value Investments in the Drug Stock Universe, Pfizer Failed: So What?
• Potentially impacted stocks and ETFs: Pfizer (NYSE:PFE). Competitors: Amgen (NASDAQ:AMGN), Biogen (NASDAQ:BIIB), Bristol Myers Squibb (NYSE:BMY), Glaxosmithkline (NYSE:GSK), Eli Lilly (NYSE:LLY), Merck (NYSE:MRK), Schering-Plough (SGP), Sanofi-Aventis (NYSE:SNY), AstraZeneca (NYSE:AZN). ETFs: iShares Dow Jones US Pharmaceutical Indx (NYSEARCA:IHE), Pharmaceutical HOLDRS (NYSEARCA:PPH), Vanguard Health Care ETF (NYSEARCA:VHT)
Thai Central Bank Deliberately Created Forex Uncertainty
When Thailand's central bank imposed tight controls on short-term investments to stabilize its currency and protect the Thai export, the major result was a sharp pullback in Thai stocks and other investment markets. Now it turns out the uncertainty created by Bank of Thailand Governor Tarisa Watanagase around Thai currency was "deliberate." According to Tarisa, "It was important and necessary for us to put a brake on the sentiment, to create some uncertainty." Though a ruling that the new capital controls don't apply to equities has helped that market to recover some of its December losses, the new rules have stifled investments in bonds, real-estate mutual funds and foreign-currency borrowings by demanding investors have 30% of their funds locked up, interest-free, for a year. The policy's detractors have complained it amounts to a heavy tax on investing. In the meantime, credit-default swaps based on $10 million of Thai bonds have risen to $37,500 up from $24,000 on Dec. 15, before the new measures were imposed. Managers of global bond funds have begun boycotting Thai debt as a result. Many members of the Thai middle class, originally supportive of the September coup, have changed their minds as they have seen the ways it has been detrimental to the Thai economy.
• Sources: Bloomberg, Wall Street Journal, International Herald Tribune/Bloomberg
• Related commentary: Thai Fiasco: The Downside of Emerging Markets, We're Buyers of Emerging Markets Stocks on Thai Related Weakness
• Potentially impacted stocks and ETFs: iShares MSCI Emerging Markets Indx (NYSEARCA:EEM), Thai Capital Fund (NYSEMKT:TF), Thai Fund Inc. (NYSE:TTF), Vanguard Emerging Markets ETF (NYSEARCA:VWO)
China's Commerce Minister: Reducing Trade Surplus is a Top Priority
The Wall Street Journal reports about some unusual comments by China's Minister of Commerce, Bo Xilai, who admits China's ever-surging trade surplus is problematic for the overall economy, and says a 5% annual increase in the yuan would help the imbalance without hurting trade. The yuan appreciated 3.4% and 2.6% against the dollar in 2006 and '05, respectively, according to a report issued yesterday by the Ministry of Commerce, but the gains reportedly "have had no obvious impact on China's imports, exports or foreign investment." China's 2006 trade surplus jumped 74% in '06 to $177.47 billion, a new record. Chinese economists are increasingly worried the imbalance is driving inflation upward, now at 1.9%. Also of concern is how much of an impact the imbalance is having on surging domestic stocks, real estate and industrial investment. Last, but not of least importance is China's deteriorating political relationship with the U.S. and E.U. over trade related matters.
• Sources: The Wall Street Journal
• Related commentary: China's Central Bank Still Trying to Tame the Dragon, China's Central Bank: Fed Rate Cut to Lift Yuan; Inflation Concerns, Despite Incredible Growth, China's Markets Account For Small Percent of GDP, Chinese Stocks Dropping -- Correction or Breather?
• Potentially impacted stocks and ETFs: Currency ETFs: PowerShares DB G10 Currency Harvest Fund (NYSEARCA:DBV), Euro Currency Trust (NYSEARCA:FXE). Bond ETFs: iShares Lehman Aggregate Bond (NYSEARCA:AGG), iShares Lehman 1-3 Year Treasury Bond (NYSEARCA:SHY), iShares Lehman 7-10 Year Treasury (NYSEARCA:IEF), iShares Lehman 20+ Year Treas Bond (NYSEARCA:TLT), iShares Lehman TIPS Bond (NYSEARCA:TIP). China ETFs: China Fund (NYSE:CHN), Greater China Fund (NYSE:GCH), iShares FTSE/Xinhua China 25 Index Fund (NYSEARCA:FXI), JF China Region Fund (NYSE:JFC), PowerShares Golden Dragon Halter USX China (NYSEARCA:PGJ)
ACTIONABLE BARRON'S CALLS
Barron's articles likely to move stocks today, culled from our Barron's Excerpts
- Barron's roundtables twelve highly-respected Wall Street analysts, among them low-P/E hunter Scott Black and Pequot Capital captain Art Samberg. Black likes: 1) Apache Corp. (NYSE:APA) -- it's cheap and will likely be discovered by private-equity buyers. (2) Bronco Drilling Company Inc. (NASDAQ:BRNC) -- at $17/share it is 'bargain basement.' (3) Home Solutions of America Inc. (HSOA) -- wrongly perceived as a hurricane-only business, it has an extensive business backlog and a 7.4 multiple. (4) Altra Holdings Inc. (NASDAQ:AIMC) -- it has #1-2 market share in 50%+ of its products. (5) Arrow Electronics Inc. (NYSE:ARW) -- one of the most reasonable tech stocks. (6) Severn Bancorp Inc. (NASDAQ:SVBI) -- has off-the-charts loan growth and interest margins. Samberg takes: (1) Monsanto Company (NYSE:MON) -- Ethanol is huge and its progress on drought-resistant corn is stunning. (2) Companhia Vale do Rio Doce (NYSE:RIO) -- no one has bothered to factor in the accretive earnings from its Inco acquisition. (3) Apollo Group Inc. (NASDAQ:APOL), Career Education Corp. (NASDAQ:CECO) and Corinthian Colleges Inc. (NASDAQ:COCO) -- for-profit education stocks have bottomed. (4) Baidu.com Inc. (NASDAQ:BIDU) -- its 64x multiple is 'obscene,' but with 170% growth, a great new search algorithm, and still low penetration, growth will accelerate.
- Bill Alpert trounces InnerWorkings Inc. (NASDAQ:INWK). With just $5.7m in profits, its present $700m cap give it a whopping 125 ratio. Ex employees say its PPM4 software doesn't even work, and Alpert says the company has tried to obscure shady Eric P. Lefkofsky's roll in its schemes. Sources say Lefkofsky and his cronies plan to cash out on 6.2 million share options this week, ahead of the IPO's Feb. 11 lockup date. [Ed: InnerWorkings has already responded to Alpert's accusations.]
- U.S.-traded Euro stocks that have the traits typically favored by LBO buyers -- stable cash flow, low debt, and cheap valuations -- include: Telecommunication Organization S.A. (OTE), Barclays PLC (NYSE:BCS) [rumors have it being bought out by Bank of America Corp. (NYSE:BAC)], Deutsche Telekom AG (DT), Deutsche Bank AG (NYSE:DB), ABN Amro Holding N.V. (ABN), Koninklijke KPN N.V. ADR (KPN), and Swisscom AG (NYSE:SCM). [Ed: General Electric Co. (GE) now says it's acquiring the Aerospace arm of London's Smiths Group for $4.8 billion, and AOL is offering $900 million for the Swedish online ad firm TradeDoubler.]
- SAP AG ADR (NYSE:SAP) shares tumbled over 10% last week after it disclosed that software-license sales were up only 7% in Q4. But arch rival Oracle Corp. (NASDAQ:ORCL) has had its own troubles; its Q4 organic growth declined. SAP's sales shortfall is just €40 million lower than its low-end forecast -- not much for a company with over €9 billion in sales. The pressure's on for SAP to make a firm commitment to quickly launch its mid-market product line, currently slated for H2 2007, upon which much of the company's future growth hinges.
- Shares of YRC Worldwide (NASDAQ:YRCW) are down about 10% since November ($40) due to severely lowered Q4 earnings estimates. Yet despite uncertainties in the trucking industry, the stock looks dirt cheap. Oil prices are plummeting, and cash-flows, up 11% in 2006, are a stellar $884m. S&P notes that YRCW's operating margins are solid, and that its business-risk profile is "satisfactory because it has a leading market share." 2007 earnings could come in well above expectations, and shares could climb above $60.
- TV stocks are down due to fragmenting audiences, ad dollars moving to the internet, and viewers skipping commercials. But New York Times Co.'s (NYSE:NYT) recent sale of a group of TV stations to a private-equity group for $575 million clobbered Street estimates of $425m, suggesting there may still be a strong market for smaller outlets. Three operators -- Gray Television Inc. (NYSE:GTN), Lin TV Corp. (TVL), and Nexstar Broadcasting Group Inc. (NASDAQ:NXST) -- look like strong LBO targets. GTN stations' ratings lead in 24 of 36 markets, NXST has a low cash-flow valuation with lots of appreciation potential, and TVL might get a buyout bid from a shareholder that owns almost half of its stock already.
- A jump in Kimberly-Clark Corp. (NYSE:KMB) call options activity last month suggests investors expect higher stock prices ahead -- on the tails of non-stop LBO rumors. B. Craig Hutson of bond research firm Gimme Credit says its EV (enterprise value) to Ebitda (earnings before interest taxes and depreciation), a key LBO ratio, is still only about 10.5x -- competitor PG's is 13.5 and CLX's is 12. It has huge globalization, a healthy cash-flow, a rich dividend, and room to streamline costs and boost revenues. If management succeeds in cutting costs, the stock's cheap with or without an LBO attempt.
U.S. Markets: 25 Possible Market Surprises for 2007
Housing: Housing Bubble and Real Estate Market Tracker
Long Idea: Newfield Exploration: Committed to Growth
Short Idea: Symantec's A Short Following Weak Data Point
Internet: Microsoft Search Loses (Even More) Momentum
Telecom: Sprint Nextel's A 2007 Turnaround Story - JPM
Hardware: Low-End LCD Suppliers and the Death of Plasma
Chips: Intel Earnings Preview: Bleeding From Price War?
Software: Symantec's A Short Following Weak Data Point
Consumer Electronics: Apple's iPhone Restrictions Are Good For Consumers
Media: A Closer Look at Casino Stocks
Healthcare: Teva: What Are the Analysts Afraid Of?
Retail: Lifetime Brands Cuts 2006 Earnings Forecast: Can Jarden Be Far Behind?
Transport: Wagoner Lays Outs GM's Top Five Priorities
Gold: Galore Creek and Agua Rica - Two High Risk Mining Projects
Energy: Oil: On Its Last Legs
Financial: Analogy: Countries' GDP to U.S. States
Asia: New Development Plans Send Malaysia's ETF Soaring
ETFs: WisdomTree Joins With Firm On Low-Fee ETF Retirement Investing
Small-Caps: Barrett Business Services: A Good Mix
Hedge Funds: Hedge Fund Winners and Losers in '06
Sound Money Tips: Even More Tips on How to Perform a (Nearly) Free People Search
Jim Cramer: Latest stock picks
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