Liberty: Home Shopping to Travel

07/02/2014 8:00 am EST

Focus: STOCKS

Leo Fasciocco

Investment Columnist and Publisher, Ticker Tape Digest

Our latest featured breakout stock owns interests in companies with a stake in the video marketing area such as the QVC Home Shopping Network, notes Leo Fasciocco, editor of Ticker Tape Digest.

With strong profits coming this year, Liberty Interactive (LINTA) is a potential breakout stock. The firm's principal assets are its consolidated subsidiaries, QVC, TripAdvisor, Backcountry.com, Bodybuilding.com, and its equity affiliates Expedia and HSN.

LINTA's long-term chart shows the stock trading around $20 in 2006. The stock took a dive during the bear market falling to $1.97.

However, since then it has made a big comeback soaring to an all-time high of $30.68 earlier this year. It is now in a base near its high. That is a bullish setup.

Earnings for the upcoming second quarter should climb 30% to 27 cents a share from 21 cents a year ago. The highest estimate on the Street is at 30 cents a share.

This year, analysts are forecasting a 35% jump in profits to $1.23 a share from 91 cents a year ago. The stock sells with a price-earnings ratio of 23. We see that as reasonable.

Looking ahead to 2015, the Street expects a 17% increase in net to $1.44 a share from the anticipated $1.23 this year. Currently, seven analysts follow the stock and all seven have a buy, the same as three months ago.

A key fund buyer recently was the 5-star rated Oakmark Fund, which purchased 200,000 shares. It is the second largest fund holder with a 1.7% stake. The largest is Dodge & Cox Stock Fund, 4-star rated, with a 2.8% stake.

We rate LINTA a good intermediate-term play provided earnings meet expectations. We suggest a stop buy at $30.30 to catch LINTA as a breakout. A protective stop can be placed near $27.50 after a breakout. We are targeting the stock for a move to $37 after a breakout.

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