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Radio One Inc. Message Board

  • kog1kog1 kog1kog1 Oct 5, 2009 12:04 PM Flag

    Why the spike?

    Anyone know why the price is rising and spiking?

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    • Not sure, but I believe the stock has been pretty "ignored." The sell off down to less than a dime, during the market crash, represented fears that the company would not be able to meet its debt covenants, and the equity would be handed over to the debt holders. Incredibly, they cut costs BIG TIME here, and they also had declines in advertising revenue that were BETTER (i.e. less) than the rest of the industry. The 2nd quarter earnings validated to me that they were SAFE....and after having no position, I loaded up in a matter of a few weeks, and bought 1%+ of the stock in the open market. They continued to meet their debt covenants, and they have SAID that they expect to continue to meet them for the next 12 months. Meanwhile, they are perhaps the ONLY publicly traded radio company (I am aware of) that has, and probably still is, buying back its common stock AGGRESSIVELY. In fact, in the last 20 months or so, they have bought back nearly HALF of the outstanding share base, reducing outstanding shares from something like 100 million, to probably something not too far north of 50 million, as we speak. THAT'S ABSOLUTELY INCREDIBLE...AND I'VE NEVER IN MY LIFETIME SEEN A COMPANY BUY IN FULLY ONE HALF OF ITS SHARE BASE IN SUCH A SHORT PERIOD!!! Importantly, this means EPS will be DOUBLE would they could be, or would be, in the next upcycle.

      The stock was so oversold, also, because Ariel was dumping a ton during the June quarter. And it took a while, after the spectacular June earnings release, for the stock to "bounce" and "fully adjust" to the match the valuations of other radio stocks, as a broader industry.

      Personally, I think ROIA/K is going to make something on the order of 70 cents in EPS next year. So, even at $1.40, it's only selling at like 2x earnings. My 12 month target: $4-5

      Strong buy long term....but wait for a (possible) pullback to 1.00-1.10.

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