2 Special Opportunities

11/03/2006 12:00 am EST

Focus:

David Fried

Editor, The Buyback Letter

Always looking for unusual opportunities - and sometimes, in far-away places - David Fried steers his subscribers to special situations that offer significant investment potential. Here, he focuses on two very diverse companies operating in very different sectors.

"We currently recommend that subscribers buy these stocks at market:

"Teekay Shipping's (TK NYSE) 5,100 employees in 17 countries operate a fleet of more than 140 tankers carrying crude oil, condensate and petroleum products, and liquefied natural gas. They also perform maritime services for clients in the oil and gas drilling and refining businesses.

"Teekay Shipping says that it transports more than 10% of the world's seaborne oil, and has ventured into liquefied natural gas shipping through its Teekay LNG Partners unit. Over the past 12 months, Teekay earned $309.38 million and generated $504.5 million in operating cash flow on total sales of $1.91 billion. The stock trades near $40, just eight times expected 2006 earnings per share. The company has a market capitalization of $3 billion and has reduced its share count by 14% since last year. Teekay's board recently raised its quarterly dividend by 14% to 23.75 cents per share, up from 20.75 cents previously. The stock yields 2.1%.

"Rent-A-Center (RCII NASDAQ), the largest U.S. furniture rental chain, operates more than 2,880 company-owned rent-to-own stores in 50 states, Washington, D.C., Puerto Rico and Canada. The stores generally offer high quality, durable home furnishings to consumers under flexible rental-purchase agreements that generally allow customers to own the merchandise at the conclusion of an agreed-upon rental period.

"The company's network of stores are called "Get It Now" or "Rent-A-Center," and virtually anything you might want to buy for your home, they offer for rent - consumer electronics (high definition televisions, home theater systems, video game consoles, stereos), appliances (refrigerators, washing machines, dryers, microwave ovens, freezers, ranges), computers (personal, laptop), and furniture (dining room, living room, bedroom) and accessories (pictures, lamps, tables).

"RCII recently announced a $576 million deal to buy Erie, Penna.-based Rent-Way Inc., a rent-to-own chain operator. Shareholders of Rent-Way will vote Nov. 14, with the deal expected to be completed in the fourth quarter. If the shareholders reject the plan, Rent-Way owes RCII $21.6 million in termination fees and expenses.

"Revenues for the six months ended June 30, 2006 increased 0.8%, to $1.191 billion, from $1.182 billion for the same period in the prior year. Same store revenues for the same period increased 1.4% and net earnings rose 5.6%, to $80.2 million, or $1.14 per diluted share, from the same period in the prior year. Rent-A-Center has reduced its shares outstanding by 6.3% in the last 12 months."

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