On November 29, 2005 Jim Cramer, founder of Thestreet.com and host of CNBC’s Mad Money, first brought attention to Central European Media Enterprises. Since he recommended the stock as a buy, its shares have increased 61% to their current value of $103.15. The company trades at only 16.8 times its 2008 expected earnings, and carries an astonishing long-term growth rate of 31%. For the first quarter of 2008, the company reported total revenues of $223.47 million, which translates to a $14.89 million net income.
Central European Media Enterprises invests in, develops, and operates commercial television channels in Central and Eastern Europe. It operates various television channels, including NOVA TV in Croatia; PRO TV, ACASA, PRO CINEMA, SPORT.RO, MTV ROMANIA, and PRO TV INTERNATIONAL in Romania; TV MARKIZA in the Slovak Republic ; POP TV and KANAL A in Slovenia; and STUDIO 1+1, KINO, and CITI in Ukraine. It also operates TV NOVA, a television channel; and cable/satellite channels, including GALAXIE SPORT and NOVA CINEMA in the Czech Republic.
The company was founded in 1994 and since that time has captured 43% of the marketshare in the Czech Republic. Cramer maintains that the company’s markets are under-penetrated, and with more saturation the company’s success will continue to develop, leading to a profit rise from the estimated 5% ad revenue growth. At its current price, Cramer believes it is cheap, and as all of you “Mad Money” fans know, when a stock is cheap, you should “back up the truck.”
Investors should also notice that there are similar publicly traded companies in the area. One such company is Emerging Media Holdings, Inc. (EMDH.OB) which primarily focused on radio and television broadcasting in Moldova, where it derives most of its revenues through advertisement sales. Moldova’s advertising market ranks among the top 10 European countries, a volume which could reach 20 million dollars, or an increase of about 675 percent over 2006.
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