Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Ticker Shock: Three Reasons Why Dish Network's Stock Could Get Strong Reception

By

Monday's top stories and stocks with potential to move.

PrintPRINT
You gotta love the weather reporters, right? They predicted rain this weekend and lo and behold - we had lots and lots of sun. I'm thinking they should dedicate the 4 minutes they give the weather reporter on the nightly news to another topic.

Asian markets ended mixed. The Hang Seng was down 1.74% and the Nikkei ended up 0.2%. European stocks were in the red earlier this morning. And here in the US, we're currently trading lower.

Here's what I'm focused on this morning:

DISH Network (DISH):
I took a little heat after DISH Network's Big Picture Looks Good appeared on March 2. In my defense, it turns out I was right on this one. Check out the stock-price action since that time.

Even more importantly, check out its first-quarter earnings, which were released earlier this morning. It put up $0.70 a share, which was way north of the $0.57 a share analysts were expecting.

The shares could head even higher in the near term:

1. That's a big beat, and I think it's going to draw a lot of eyes on what could be a rough day. (As I'm writing this, the Dow Futures are off about 90.)

2. In spite of its run up recently, the company trades at just about 7.1 times the current-year estimate. I think that's super cheap.

3. We could actually see the current full-year estimate of $2.17 a share ratcheted up in the days ahead, which in turn, could drive the share price.

Where do I think the stock would be more fairly valued? $20. At that point, I'd probably move to the sidelines. But again I think it's got some room to run from here.

General Motors (GM):
I've been pretty harsh on the automaker in the past, and I know my views have made more than a few GM bulls angry. (I have some colorful emails to prove it.)

But the fact remains: I think the stock should be avoided, much like the swine flu. In fact, I read a great article this past weekend, explaining in simple language what GM is facing.
Per the Associated Press:

"To remake itself outside of court, GM must persuade bondholders to swap $27 billion in debt for 10% of its risky stock. On top of that, the automaker must work out deals with its union, announce factory closures, cut or sell brands and force hundreds of dealers out of business - all in 3 weeks. 'I just don't see how it's possible, given all of the pieces,' said Stephen J. Lubben, a professor at Seton Hall University School of Law who specializes in bankruptcy."

The bulls have argued with me that:

1. The company has a long operating history. It's had to deal with significant competition and lousy economic times before, so why can't it do it again?

2. The government would never allow it to go bankrupt.

3. The stock at $1 and change has huge upside potential if things do work out.

But my response to each point was, and remains:

1. While historical analysis is sometimes the only thing we have as we try to game the future, there are times when new history is made and analyzing the past is about as helpful as ice cream in a snowstorm. Also, I might add Lehman and Bear Stearns had long operating histories, too.

2. Maybe it will, maybe it won't. But the Chrysler bankruptcy doesn't exactly leave me optimistic.

3. I get the whole risk/reward thing. But there's a much greater chance we see zero than $10.

Bottom line: I've been and will remain on the sidelines. I'm rooting for shareholders and wouldn't want to see the company go bankrupt because it truly does have a good history. But right now, I don't see much light at the end of the tunnel, and the time to find solutions is running out.

For some of my previous comments on GM, see Ticker Shock: GM Sputters on Cash Concerns.
< Previous
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE