Lamar Advertising (LAMR) 11/6/09 PriceWatch Alert Support Down To $26.03

Posted: Friday, November 06, 2009 8:39 AM EDT
By: Market Intelligence Center Staff

Lamar Advertising (NasdaqNM: LAMR) closed yesterday at $28.80. So far the stock has hit a 52-week low of $5.35 and 52-week high of $30.68. Lamar Advertising stock has been showing support around 26.03 and resistance in the 31.25 range. Technical indicators for the stock are Bullish and S&P gives LAMR a very weak 1 STAR (out of 5) strong sell rating. LAMR appears on the Investors Observer Stocks In The News list. LAMR reported a third-quarter loss Thursday of $4.87 million, or 5 cents per share, on revenue of $271.77 million, beating analysts' forecasts of a 16-cent loss on revenue of $265.48 million. For a hedged play on this stock, look at a Jan '10 25 covered call (LJQ AE) for a net debit in the $24.00 area. That is also the break even stock price for this trade. This covered call has a 71 day duration, provides 16.67% downside protection and a 4.17% assigned return rate for a 21.42% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the LAMR Jan '11 7.50 Call (ODZ AU) and selling the Jan '10 25 call (LJQ AE) for a $17.05 debit. The trade has a 71 day life and would provide 14.76% downside protection and a 2.64% assigned return rate for a 14.00% annualized return rate (for comparison purposes only). Lamar Advertising does not pay dividends at this time. [FBB-Seven Summits Research]