Big Media: Big Yawn

The advertising market continues to be severely weak. Yet, the fact that we're not in freefall has caused some of the most beaten down and debt-laden companies to be bid up in the last 6 weeks.

Names such as Harley Davidson (HOG), Royal Carribbean (RCL), Cemex (CX) and Lamar Advertising (LAMR) are all up big since March 6th (65 - 167% vs. 25% for the S&P).

Comparatively speaking, Big Media's returns over that time period look more modest. Yes, CBS is up 70% since early March, but it's still trading at less than $6, giving it -- to put it in perspective -- only a little more than double the market cap of what it agreed to buy CNET for last year.

News Corp (NWS) and Viacom (VIA) are up 35% since early March but lag the S&P over the last 6 months. Disney's (DIS) return since March 6th is 2 points less than the S&P's. And Time Warner (TWX) stock price (not including the dividend from the spin-off of Time Warner Cable (TWC)) is only up +2% since the great Bull Run began 6 weeks ago. Memo to Jeff Bewkes: where did my rally go?

The truth is that, although Big Media has been pummeled since this bear market began, it was never really priced for extinction (except maybe CBS, which is why it has bounced back as much as it has) like some of the other consumer discretionary plays. This "rise from the dead" rally hasn't let them participate.

Big Media is left priced for a severe long-term painful future, which is probably accurate.
Therefore, it's a space I'm avoiding.

Position: None.

Originally published in RealMoney.com on 4/28/2009 11:30 AM EDT

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Five Stocks which will Drop, but Might still Snap Back Higher

A friend of mine said to me yesterday that he's never seen so many stocks that trade like options. They're "bifurcated specials" -- either they're going to double or triple from here or go to zero in fairly short order.

Even though many commentators, including Doug Kass in these pages, are warning against the market being short-term overbought, there are some stocks of companies with bad fundamentals facing terrible headwinds, which nevertheless keep going up in the short-term. Even though they look overbought, it's difficult to pull the trigger on shorting them.

Stocks like Harley-Davidson (HOG), Capital One (COF), Royal Carribbean (RCL), Carnival(CCL) and Liberty Global (LBTYA) have gone up 50 - 110% in the last 6 weeks. Yet they're down 50 - 65% in the last year. It's an overbought snap-back.

Eventually, the weak consumer environment that will persist will sour their results and impact the stocks. However, investors need to be mindful of betting on a downturn too soon -- which can be just as hazardous as betting on a recovery too soon.

Originally Published on RealMoney.com on 4/20/2009 8:20 AM EDT

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