Forget Dubai: ValueVision is bigger news
Today's Financial News - Posted November 30, 2009
While the talking heads focus on Dubai, ValueVision (NASDAQ:VVTV) shareholders have a shot at another shot at predictable holiday gains.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): I bet the talking heads on the financial networks were drooling as the words scrolled across their ticker. With most of the country in a post-holiday stupor, either riding out a vacation day on their recliner or fighting for their lives at the mall, word that Dubai was melting down was just what the networks needed to bring viewers back to their sets.
On any other day, the Dubai story would have been a B-page sidebar. But on Black Friday, with nothing but mall Santas and frenzied shoppers to interview, the media managed to turn it into a full-fledge financial emergency.
While the world markets haggle over $60 billion in debt restructuring (a drop in the bucket in modern Wall Street bailout terms), traders are using the volatility to their advantage.
One stock all traders should be aware of on this so-called “Cyber Monday” is ValueVision Media (NASDAQ:VVTV), the home of ShopNBC.
As consumers cut back this holiday season, shoppers will diligently search for the best deals. One place they will find them is on the company’s home-shopping network and the ShopNBC web site.
I have tracked ValueVision for numerous holiday seasons. It is a predictable, cyclical play with the holiday season the catalyst for strong swings in either direction.
Set for another turnaround
Historically, buyers that got in before the holiday season and got out early in the New Year made sizeable and reliable gains. But predictability kills Wall Street.
Over the past several years, buyers that got in on December 1 and out on January 1 lost money. That’s because after years of predictable gains, the bandwagon become overloaded.
But this year I am expecting another turnaround in the trend. We’re back to buy now and sell in January. You won’t get rich from the play (20% upside), but you will find a way to eliminate most market volatility and put weaker consumer spending on your side.
ValueVision is a small, $107 million company. It has no long-term debt and is poised to rebound to positive cash flow this quarter.
The real kicker to this stock, however, is its high beta score. Right now, shares come with an ultra-high reading of 3.26. That means for every 1% swing the market makes, ValueVision shareholders are likely to be sitting on a 3% or greater move.
But the wild ride won’t last. ValueVision earned that score while the markets focused on consumers. For the past three months, it has been jobs, jobs, jobs. But now that Dubai has raised a banking-sector smokescreen, ValueVision’s beta will fall.
That means prices will rise.
Shares are near the bottom of their recent pattern. That is good news for investors ready to make a move.
Check out the stock and see if it meets your needs. I have a feeling TFN Strategic Trader members may be hearing more about this one later in the week.
Next Article: Worst-performing commodity of 2009
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