Lamar: Buy Boring Billboards Business?

By The Wall Street Fox Tuesday, May 17, 2016
I recently road tripped down to New Orleans (2,800 miles round-trip), and in the process I viewed a ton of billboards. I have been watching Lamar Advertising (LAMR) for a while now and this trip solidified my bullish thesis.

Lamar had a strong presence in the Midwest. Of the ~500 (best guess) Lamar billboards I saw, I counted only four empty/ad-free.

This advertising space has a high barrier to entry. New billboards have to be approved by local governments on a case by case basis, and billboards are ugly, so new entrants can't set up shop overnight.

Although billboards command little market share in the advertising industry, vehicle miles traveled on U.S. roads is at an all time high.

The slow conversion towards electronic billboard displays is the growth driver behind this industry.

Lamar converted to a REIT a few years ago and currently yields 4.7%, and a forward P/E of 19x.

Lamar has rallied nearly 30% off its mid February low. The stock put in an inverted head & shoulders and reached its $7 measured move target of $63. I like Lamar long term for my personal IRA, but will be waiting for a pullback before initiating a position. On watch for now, in no rush given current market environment.

Other players in the billboard space are CCO and OUT.

The Wall Street Fox

The Wall Street Fox utilizes fundamental and technical analysis to generate investment ideas. TWSF holds a MBA, and is currently preparing for the Chartered Market Technician (CMT) designation.

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