Lamar Advertising: 30% Upside, Very Limited Downside
- Lamar received an IRS Private Letter Ruling that allows the company to be taxed as a REIT starting January 2014.
- The stock actually sold off after the long awaited announcement due to investor fatigue, technical factors, and muted quarterly results.
- This has created a very attractive buying opportunity: Lamar has become one of the cheapest stocks in the REIT space in terms of AFFO as well as dividend yield.
- Using extremely conservative estimates, I get a price target of $64, or +30% from yesterday’s closing price of $49.12.
- This buying opportunity exists partially due to the fact that most sell side analysts covering the stock are still media analysts, not REIT analysts.