Lamar Advertising A 'Get Rich Slowly' Company

“While Outdoor advertising doesn't have the flash and glamor of, say, the film business, or the OTT video business, we ask Media investors to think of LAMR as a "get rich slowly" stock,” Loop Capital Markets’ David W. Miller said in a report. He initiated coverage of Lamar Advertising Co LAMR with a Buy rating and a price target of $82.

Bottom Up Approach

Most portfolio managers believe that the market is in the latter innings of a bull phase. The long bias would focus on the highest quality names in any sector. Analyst Miller pointed out that Lamar Advertising seems to be a high quality name due to the following reasons:

1. The company is the #1 or #2 market share player in each of its DMAs
2. Lamar Advertising enjoys the highest margins in the Outdoor sector, at 43.1 percent
3. The company generates the highest ROE in the Outdoor sector, at 28.6 percent
4. It is the #1 share player in highway directional
5. The company is the #1 share player in digital boards
6. Lamar Advertising has the lowest exposure to lower-margin transit advertising
7. The company has no exposure to currency fluctuations
8. It pays the highest dividend among the three public Outdoor plays

Top Down Approach

According to the US Highway Safety Authority, the average commute during weekdays has grown from 19.4 minutes in 1985 to 45.2 minutes. While television is witnessing a decline in viewership, such shifts are not expected for Outdoor advertising. “Unless some sort of technology arises that makes automobiles obsolete, the case for the validity of Outdoor advertising is a strong one,” Miller wrote.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!