Barron’s had a very flattering article on Kodak’s saying the beaten down stock may double over the next 3 years (they have to rise 55% just to get back to where they were in January).
With 3 holds and 6 sells out of 10 analysts covering this stock and the stock trading at a 25 year low of $22, I think it is time to be the wolf amoung the sheep and take a piece of this one!
Sales were up last year and this year and the company will be doing a special investor event at the CES show in January so I think they are serious about addressing valuation issues.
The company has 95% institutional ownership, which has actually increased the last quarter and is heavilly shorted.
Forward p/e is around 12.5 giving the company, with $13Bn in sales and $1Bn in losses, a market cap of $6.3Bn. If we assume the losses are really from the restructuring, a return to the normal $500M in profits would be a huge boost to the stock. I’m liking the look of the restructuring because the company, although very late out of the gate, is the leader in Digital camera sales with a 22% market share.
I assume they have some kind of plan so I will be looking at them long before the CES show but I think the Barron’s article will trigger a sell-off as fast as it triggers some buying.
I am going to go for the January $20s for $2.55 (a .70 premium) and will be looking to get out as soon as I pick up 20%. No trade if it opens down or if it gaps up past $22.50. There will be heavy resistance at the 50 dma of $23 but above that it could have a great run.
