Lamar Advertising (LAMR) 11/9/09 PriceWatch Alert Technicals Showing Bullish

Posted: Monday, November 09, 2009 8:17 AM EDT
By: Market Intelligence Center Staff

Lamar Advertising (NasdaqNM: LAMR) ended the last trading session at $29.07. 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 28.24 and resistance in the 30.38 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 an Apr '10 25 covered call (LJQ DE) for a net debit in the $22.87 area. That is also the break even stock price for this trade. This covered call has a 159 day duration, provides 21.33% downside protection and a 9.31% assigned return rate for a 21.38% 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 10 Call (ODZ AB) and selling the Apr '10 25 call (LJQ DE) for a $13.75 debit. The trade has a 159 day life and would provide 18.30% downside protection and a 9.09% assigned return rate for a 21.00% annualized return rate (for comparison purposes only). Lamar Advertising does not pay dividends at this time. [ABR-Seven Summits Research]