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Buy TMN Media at 51.5p My pick for this week is a risky short term trading play on a potential takeover situation at TMN Group (TMN). I dont want to go too much into detail about what the business does as that isn't the point of my investment case today, but in brief, TMN has a number of businesses which focus on providing online marketing services such as direct marketing, reward schemes, market research and other electronic based advertising services. On the 10th of March the company revealed that it was the subject of an early stage bid approach from an un-named party, which in due course turned out to be the digital marketing company Tangent Communications, for the sum of 50p per share. TMN subsequently told the market that it thought the bid significantly undervalued the company and it also didn't seem too impressed that Tangent's bid was only had a 40% cash value, with the rest being in Tangent shares. The key thing now is that the shares have gone above the 50p bid price due to expectations of TMN receiving further offers. Since Tangent's bid the company has been approached by a number of parties expressing an interest, including potential private equity buyers. Tangent's bid was at a multiple of just 9.4 times expected April 2008 earnings of 5.3p. Now, along with the company I agree that the offer does significantly undervalue TMN. Even more so when, boosted by several recent acquisitions, earnings are expected to grow to 7.4p in 2009. On a forward take out multiple of just 10 times I can see another bid potentially coming in at around 74p, which is a 31% premium to the current price of 51.5p. Now that isn't guaranteed but with the earnings growth that TMN is set to deliver I think a price in that region is only fair. BUY. Key Data EPIC: TMN Scarlett Moore pens a weekly share tip for users of Sharecrazy Supermarket. It costs just 3.99 pounds a month to access Scarlett's tips. The supermarket also offers an in depth sector report each quarter worth £15 (this quarter's report is 6 Oil stocks you must buy NOW!), the rumour mill (read the latest rumours and stories on stocks and shares every day), a 20% discount on top investment books and websites and discounts on top English wine plus much more. To access this premium product for the equivalent of less than a quid a week click HERE.
*The value of your investment and the income from it can go down as well as up and you may not get back a significant proportion of your investment. Past performance is not a guarantee of future performance. If you are in any doubt as to the suitability of an investment, you should seek independent financial advice. |
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