Charles,
I've been following CCU for a while now. It's up big for a couple of reasons:
1. High revenue growth. Unfortunately the growth is all from acquisitions, so the price to sales has not declined, it's gotten higher.
2. The broadcast media business, especially radio, has been going through a consolidation phase because of ownership rule changes by the FCC. The belief is that radio stations will have better pricing power for advertisers when one company controls a major part of the radio stations in a market. One radio exec who had been buying stations has stated, "I stopped buying stations when they started looking less like businesses and more like tulips." I believe that CCU is a company to watch. P/E > 130, P/S > 11. Right now the chart looks like a moon rocket from 45 to 90, but I don't think it's going to make it to the moon, and when it falls, it will have a long way to go.
I agree with you that cable tv companies are overvalued, but I'll wait (as with CCU) till the sentiment changes before initiating a short. Thanks for the heads up on ADLAC, I'll add it to my watch list. It's not often that you see a company with a stock price of close to $30 and a book value of -$61.63. Of course I keep forgetting that this is the new era where profits and book value mean nothing. This market is amazing. It's funny, if you look at ADLAC's press release for the quarter ending Dec 31, 1997, you'd hardly know that their quarterly loss is $1.25 per share. |
