Daktronics at Perfect Buying Spot

An incredible opportunity is presented to us amid the recent strong market corrections and panic sell off across every sector. But don’t sell everything. Start buying selectively.

I recommended buying Daktronics (DAKT) while in low twenties ($21), and we have hit multiple targets with it. In the meantime market volatility has brought this stock to a very strong support level, still not breaking the strongly developed uptrend. In addition, Daktronics have in the meantime become a #1 Ranked stock by Zacks Investment Research, thus becoming a Strong Buy.

This market correction offers us an opportunity to enter at the great level again, especially if one is daring to play the upcoming earnings. This $1+ billion market cap company announced during the last earnings report increased revenue growth on high margins, thus allowing them to engage in more aggressive deals without losing on profitability. Daktronics is number 1 in its business, and I am sure that the upcoming earnings will pleasantly surprise again.

Michael Alpert, the manager of Seligman Frontier A Fund thinks that “There's a huge tidal wave of stadiums being built or upgraded," as stadiums are old. In addition, as per the Smart Money article today, there's the move away from dual-use stadiums shared by both a football team and a baseball team. Now each sport gets its own facility, opening up new opportunities for Daktronics in the years ahead.

But hey, that’s not all. "People are spending a ton of money to go to these games and they're demanding high-definition stadium screens," Alpert says. Stadiums are upgrading from regular boards to Daktronics’ high-definition digital displays, and one can expect the “try-to-match” trend to continue on all fronts. Steven Dyer, an analyst with Craig-Hallum Capital Group, expects 112 projects happening in the next three years. And those are some rewarding projects. Just as an example, the Kaufman Stadium project alone will bring $10 million to Daktronics, and the new stadiums being built by the New York Yankees and New York Mets could bring estimated $20 million each. Arizona Diamondbacks, Dallas Cowboys, and many others are expected to start upgrading soon, and Daktronics wins most of these deals historically. And then add all other business opportunities, such as big displays in metropolitan areas throughout the world, and cities’ needs to upgrade all those old huge displays to high-def digital solution.

Imagine the possibilities here: as per Thomson Financial, there are a half a million billboards in the country and only 600 have been converted to digital so far. Only 600 out of 500,000. Now that gives you something to talk about.

Technically, Daktronics is at the perfect buying spot. Strong support, and open waters to $37, as per the new chart formation below. Beautifully developed cup and handle just adds to the conviction. Upgrading Daktronics to Strong Buy from a Buy, and raising a med-term price target to $37 from $35.

Disclosure: Author has a long position in DAKT

Comments

[Nerdie McSw...:]

So much for strong support and open waters!

2007 Dec 04 10:36 AM

[doeboy:]

DAKT is snatching up contract after contract and the street could care less. Its only a matter of time before they catch on to this stealth bullmarket. Pro sports are going through a huge HD upgrade cycle (i.e Yankees, Colts, DBacks) and DAKT is leading the way.

2008 Jan 10 10:07 PM

[doeboy:]

Yet another one...the new Mets stadium announced today.

2008 Jan 28 01:23 PM

[Pfloyd234:]

Ouch that one hurt!! Someone wrong again. At least they are almost back to 20. But it does look like a good one. I should of bought at 15!!!

2008 Jun 22 10:15 PM