Nancy's Newest: A Sporting Opportunity

06/03/2005 12:00 am EST

Focus:

Nancy Zambell

Editor, Wall Street's Best Investments and Wall Street's Best Dividend Stocks

Few in the advisory world better represent integrity and dedication to investor education and success than Nancy Zambell, and I’m thrilled that the recent Money Show coincided with the re-launch of her UnTapped Opportunities newsletter. Here’s a look.

"I came to the investment newsletter field after many years in banking and brokerage careers, analyzing and uncovering well-run companies. I created a proprietary system that helps me evaluate a stock, based on a set of parameters developed from my years of studying the markets, industries, and individual firms. In addition, I employ a lot of 'elbow grease’ to find the strongest, best-run companies whose shares have real potential. UnTapped Opportunities will find companies whose stocks are not widely followed by Wall Street and are undervalued in relation to their peers and their own historical trading ranges. And that leads me into the first pick in my first issue: Outdoor Channel Holdings (OUTD NASDAQ).

"The company is a rising star in cable and satellite markets around the country. It is a national TV network that beams over 100 weekly television programs to more than 5,700 cable and satellite service providers. In 2004, it was carried by the highest percentage of cable operators among those networks with less than 35 million subscribers. Its range of relationships includes the ten largest cable providers in the US. In 1999, some 5.3 million subscribers tuned into the Outdoor Channel. In just six years, that number has almost quintupled to 24.4 million subscribers, who now watch Outdoor Channel's hunting, fishing, shooting, and off-road motor sports shows.

"The firm's  target audience is comprised of the 82 million hunters, fishermen, and traditional outdoor sportsmen. National advertisers include Ace Hardware, AutoZone, Dickies, Geico, Honda, Jack Daniel's, John Deere, Kawasaki, Polaris, Quaker State, Remington, Suzuki, the US Army, and Yamaha. In addition, two rapidly expanding technologies will likely propel Outdoor Channel's growth well into the future: First, digital transmission technology will result in additional channel capacity. The firm is also ready to grab its share of the lucrative audience for high definition TV, as it recently launched as new high-definition network.

"For 2004, revenues rose 26% to $40 million. However, as a result of acquiring a 17.6% minority interest in the firm, it reported a net loss of $26.7 million for the year. That is all over with now. Growth estimates for this year are 102%. The stock began trading on the NASDAQ last September, so is not yet widely known. Thus, the time is right to buy into these undervalued shares. It is coming off an unprofitable yearunrelated to its operations and the company is primed for growth in revenues and earnings. New technologies will expand its market share and its stock is undervalued, trading near its 52-week low. And the stock is underfollowed. Institutions own just 4.75% of the company's stock and just a couple of analysts follow it. I consider OUTD a buy at a price no greater than $16 per share."

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