Tivo (TIVO) has become synonymous in how we refer to recording our television shows just as Google (GOOG) has become the cultural term for performing a search on the internet. The past three months of market volatility have rewound Tivo's stock price to an attractive point for a nice buying opportunity. Patient investors taking a position at the current level of around $8 should easily earn a 25% - 30% return on their investment.
Below are listed seven reasons to go long Tivo at this level:
The company has $567 million in cash and cash equivalents and short-term investments. That's plenty of cash to enable Tivo to continue to enhance its product offerings and work at transitioning into a consistently profitable company.
Tivo's Intellectual Property Portfolio protecting its technology is extremely strong, has been thoroughly tested in court, and has been victorious against the likes of DISH Network (DISH) & AT&T (T). These victories have led to cash settlements and licensing deals.
Verizon, (VZ) Motorola (MSI) and Time Warner Cable (TWC) are some of the current companies that Tivo is taking to court for infringing on Tivo's patents. The company will stand a good chance of winning these trials and being awarded sizable cash payments and/or settling out of court and commanding licensing fees.
In the first quarter 2012, Tivo grew its subscription base by 27% year over year and grew service and technology revenue by 40% year over year.
Content, content, content. Tivo continues to add more media content choices to the home experience. The company currently offers media from Netflix (NFLX), Amazon (AMZN), Hulu, YouTube, and music from Pandora (P) and Rhapsody. Tivo just announced a partnership with PayPal that will allow secure commerce though your television remote that most likely will grow into much more revenue as time goes on.
And of course...there's always the Apple, (AAPL) Microsoft, (MSFT) and Google buyout rumors that pop up yearly. About once or maybe twice every year one of these companies is rumored to be interested in buying Tivo and the stock gets a nice boost.
Conclusion: With the strong financial position, growing partnerships and numerous product offerings, TIVO should have no problem bouncing back up to $10-$12 a share when the markets settle down, rewarding patient investors with a nice profit.
Additional disclosure: I may initiate a position in TIVO early next week.