CKX is involved in the entertainment and media businesses. The company represents "American Idol," manages entertainers through its MBST subsidiary, and makes money on the branding of historic entertainment icons like Elvis Presley and Muhammad Ali. The company is launching a snack-food line under Ali's nickname, "The Greatest of All Time," and is working to step up its promotion of Elvis to coincide with the 30th anniversary of his death. CKX also represents David and Victoria Beckham, which means it's expecting to cash in on the soccer star's widely publicized move to the Los Angeles Galaxy.
While the stock admittedly hasn't done what I'd expected, signs are pointing in the right direction. After suffering an operating loss in 2005, CKX's results in 2006 have been much improved, with revenues in each quarter above the respective quarters in 2005, and operating margins showing profit in each quarter so far. "American Idol" showed impressive growth last year, and as one of the most lucrative shows on the market, it is likely to continue to generate solid income for the foreseeable future.
To be sure, the entertainment industry is notoriously fickle, but CKX's CEO Robert Sillerman has an excellent track record and made a lot of money for me and other investors with SFX and SFXE (radio and live entertainment companies). This one is a risk to be sure, but if you have some money to take a chance with, it is a good bet. For those of us that already took the plunge more than a year ago, we may finally be seeing some green. Even technically, the stock seems to be well-positioned.
Type of stock: A media and entertainment company with some very high-profile clients, a strategy that will outshine and surprise, and a brilliant CEO that is just starting to turn profitable.
Price target: This stock is currently trading around $13. I think its going to get up to $20 this year and if you buy now you could see a 50% return on your investment.
Disclosure: Author is long CKXE
CKXE 1-yr chart