Stocks That Should Double: Media (DISH)(TSCM)(CBS)(GCI)

This week 24/7 Wall St. is picking several stocks that are likely to double off of their lows.  The  time frame is by the end of 2010, which is meant to coincide with some form of economic recovery next year.  This is not based on a sharp turn up in the economy. A number of the credit and financial issues facing the markets will be in place for the near-term or longer.  The other assumption used for choosing the stock prices is a market bottom of 600 on the S&P 500 Index.

These are the media stocks.

CBS (CBS) is a dog of a stock and a dog of a company. Its efforts to improve its  online presence by purchasing internet content company CNET have done very little for earnings. At this point, it is clear that CBS overpaid. But, the company has one significant advantage that has little to do with management. It has a huge footprint in the broadcast TV market. As national advertising revenue recovers, so will CBS earnings. CBS trades just above $3, down from a 52-week high of $25. In both 2007 and 2006 when the economy was relatively good, the firm made $2.6 billion on over $14 billion in revenue. CBS may not get back to $25, but even a modest improvement in the marketing climate should allow the stock to double.

TheStreet.com (TSCM) depends on financial and high-end consumer advertising and a subscription business aimed at investors. A brutal market sell-off in addition to sharp cuts in marketing budgets for luxury goods and brokers have cut into TSCM’s growth. In the final quarter of last year, revenue fell 17% to $16.5 million. The company took an asset impairment write-off in the period, otherwise it would have operated at close to a breakeven down from a profit of $4.2 million in the same quarter a year ago. TSCM has over $76 million in cash, restricted cash, cash equivalents and debt securities available for sales. The firm’s market cap is $56 million. Shares trade for $1.85 down from a 52-week high of $9.49. TheStreet has already indicated that the first part of this year is not looking any better. Even a modest recovery in revenue in the second half should put the shares back over $4.

Gannett (GCI) will never recover. That is the conventional wisdom. It is in the newspaper business which is dead. Its debt was recently cut to junk by Moody’s and it reduced its dividend. Shares have fallen from a 52-week high of $31.86 to $1.85. Over the last year, the stock has dropped as much as shares in some of its major rivals. but Gannett is by far the strongest company in the industry. Even if Gannett out of business in a decade, it prospects over the next year or two are reasonable. Last year Gannett had revenue of $6.8 billion, down from $7.4 billion the year before. After backing out a non-cash charge, the firm made about$1.2 billion, off from almost $1.7 billion in 2007. Gannett’s revenue will almost certainly be down again this year, but it should benefit from two things. The first is cost cuts it has already made along with more that it is likely to make and the very good chance that the company will begin to close money losing properties. The print industry will never be close to what it was five years ago, but small recovery in national and local advertising combined with brutal costs cuts will keep Gannett on its feet. The stock should be down, but not to under $2.

DISH Network (DISH) reported flat revenue in the fourth quarter at about $2.9 billion. Net income was up to $217 million from $175 million in the same period in 2007. Investors were upset because paid subscribers fell by 102,000 to 13.7 million. The recession was almost certainly the cause of the drop. DISH shares have fallen considerably since hitting a 52-week high of $36.11. They now trade at $9.74. DISH subscription counts should level off or even move up some as the economy improves and, even in a downturn, it is doing well.

Douglas A. McIntyre