Switched On: Liberty Media (LMCA) Stock Could Rise 25%

The stock does not have a long trading history but appears to be headed to new all-time highs.
By Bruce Kamich ,

NEW YORK (TheStreet) -- Shares of Liberty Media (LMCA) do not have a long trading history but shares appear to be headed to new all-time highs.

In this chart of LMCA, above, we can see that the stock tested the $35 level three or four times, and at the end of September, started a strong advance, taking prices above the 50-day Simple Moving Average and the 200-day average. Prices made new 52-week highs over the past month, and the slope of the 50- and 200-day averages turned up. The On-Balance-Volume (OBV) line inched up last month, too.

This chart of LMCA, above, shows a number of bullish setups. Prices for LMCA are above the 40-week average, and the slope of the 40-week average has been positive for about a year. The OBV line has been moving up in fits and starts since the beginning of the year, and the Moving Average Convergence Divergence (MACD) oscillator crossed above the zero line. A test and breakthrough over the all-time high of $42 is likely. There may or may not be a pullback to buy, but sell stops should be below $38, for now. The height of this sideways consolidation is $10, and adding that to a breakout at $42 would give us $52 as a potential price target.

Separately, TheStreet Ratings team rates LIBERTY MEDIA CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

We rate LIBERTY MEDIA CORP (LMCA) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 22.0% when compared to the same quarter one year prior, going from $50.00 million to $61.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 5.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $367.00 million or 35.92% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.01%.
  • The gross profit margin for LIBERTY MEDIA CORP is rather high; currently it is at 57.86%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.99% trails the industry average.
  • The current debt-to-equity ratio, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.39 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • You can view the full analysis from the report here: LMCA
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