Apr 9, 2013|
Stock Talk - Jim Royal, Motley Fool
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
Welcome back we're joined by the -- from the Motley fools got a couple of stock picks horse this first one I've never heard of before didn't even know they existed it's called Cincinnati Bell CBB is the symbol. Jim good morning welcome to show. Hey good morning Barrett thanks for having me out. I'm back with another special situation. In Cincinnati Bell. They just. -- -- Our IPO -- one and I wanna talk about iris one -- We'll get to Cincinnati bow out because a lot of the value at Cincinnati Bell relies on pirate one. I ever wind just came out in January it -- that are reaped. That IPO just a couple of months ago they -- stated that if for corporate client. How -- services and then charge them. They're focused on being the goat meat supplier for fortune 1000 company. Huge huge client and they RD number one under after just a few years -- bit -- growing it. 60% rate could very very very very back. And they have a special the energy sector. Already just just right now only 10% of businesses large businesses. Outsource their data operations yup there's that huge potential for growth and it makes a lot of sense for businesses to engage them. Because they can -- their core competency and they can reduce cost pretty large custom. -- -- So the this this this data center. The symbol for that is CO NE is Aaron. Exactly -- one veto any trade on the -- And how has it performed since they went public. It's done actually quite well it's up about that 40% since the IPO price. But I think there's really not at that point borne out I think is really the opportunity persons. Substantial gains in the next year. Now how much of Cyrus one is owned by Cincinnati Bell. Right great question. So they don't right now Cincinnati Bell and 69% of that is one that they could were already billion dollars. So really Ari you don't have to buy Cyrus one you can just by Cincinnati Bell. Well I think I think that cheap way to own Cyrus won is by buying Cincinnati Bell already done that. Baker -- about it -- 9% stake is worth a billion dollars. Rate which is more in the market cap for Cincinnati Bell. Exactly -- So -- at Cincinnati Bell has that huge play just. Quick -- they got they used Telecom operation in the Cincinnati area pitcher you know you might get in the next month and -- it's there yet very small at that art department. They'll. They don't -- wind. What they're planning to do in the next couple years he would. Monetize it it felt that take if you know percent stake in pirate one that the market and you expect cash to -- -- their own. Okay now this is that. Yeah the -- it is fascinating because I'm just doing the numbers in my head here. And yeah you're right -- -- the cheap way -- you hit it's like a two overs and great great companies for the price of one. Absolutely that they're gonna spelled out that. At stake in the -- -- rapidly increase of pretax slope by doing. -- get a -- the money was when they sell their stake when they are because they're that's going to be a lot of money to them. Right that's going to be a lot of money there they own two billion dollars they have two billion dollars in debt right now it is going to be able to pay that down to should be able to pay that down to less than one billion maybe 800. 800 million. And that makes them hugely profitable. That later generate a lot of -- -- would they be able to maintain their customer base visit Cincinnati Bell they're not a cellphone company right. Well paid big bullet -- wireless operations that they're looking at they're probably looking dispelled Activision. But yet debate they primarily provide your sort of land line. Type of operations. New cable into the houses as well elected they do they provide television services like you can. You can go to them and by bundled product -- media or Internet service UT might injure hardline phone. Exactly exactly now they're investing in that there increasingly investing. In those types of operations. And that's -- the stock down and that in near terms investors were disappointed that they. Work paying a dividend didn't decide to go with the dividend instead reinvestment operations. But that's gonna help revenue -- and cash flow in the longer term. And 341 as we are paying for it -- I looked another analyst. Covering the stock has a one year price target of 388 what's your price target on the. I think -- acted very easily double within a year certainly within two years. I and I don't even put a triple outside of out of the realm of possibility within two years. Very interest in and you can buy for three dollars and forty to go out. Did CEO and yet -- have just done that then they'll on the open market bike pretty substantial stake 300000 dollar pot but -- EO. And now at 5050000. Dollars for the the -- That's a lot. -- insiders if the insiders are buying it that's a bullish indicator. Hey great worked him thank you. It wouldn't innovative idea right ECU buy this stock -- buy it for three dollars and 41 cents a share right that's cheap. But you're really you're also an old two thirds of this other companies Cyrus one. That's trading for 23 dollars this year is that they give the cheap stock owns. 70%. Of Cyrus won so it it is just it's it's an innovative play. And in a I find it intriguing and a it just my -- that. Homework assignment illegal. Immigrants or illegal aliens in the United States were told by the Wall Street Journal yesterday it's eleven million people. True or false. That's true eleven point two -- at least as of about six straight months ago. Forty million immigrants so that means 28%. Of that forty million. Is illegal this according to the pew research Hispanic center CI then I'd look. In other studies June it said none the numbers on 119 it's it's twenty million that's back to the highest calculation I saw was 25 million. You didn't see anything like that -- -- and calculations now with Hugh -- pretty reliable. -- Our guide gives some dirt bags for a -- we can we do dirt bags in the next segment yes we can't she's so excited she's got four I think they have water. None of them yeah -- yet the only -- I don't know why is the guy I just like you tender. And that's not even on the attorney -- -- that -- dirt bags with -- coming up next on the financial exchange.