Focus Media (FMCN) is back on the radar.
One-Year Chart
FMCN has gone from $15 to $35 within a year. The stock’s down to around $30 now due to the market correction.
Profits jumped 88% last quarter as FMCN beat the street estimate of 69% growth. Profits are expected to climb 27% and 23% the next two quarters, and those figures just increased so a couple more beats is possible.
Notice on the right of the chart that 2009 profits fell. The company was set to make $2.78 that year and ended up making only $0.68 after it got into trouble over sell phone texting. I wrote a more in depth analysis on the subject here. With 2011 profits set to grow 23%, that bad news is in the past.
Fair Value
I’ve always thought FMCN was worth 35 times earnings. The company used LCD displays to flow advertising in stores, elevators and other public places. It’s not high tech but this is a dynamic area.
That 35 P/E makes FMCN worth $54 to $62 during the next 18-months. Solid upside from the $31 the stock is selling for now.
Bottom Line
FMCN is on the radar and looks tasty from here. I might buy this stock shortly but the market is in a correction and I’m trying to let things settle down.
