“You only get so many chances at stocks that can predictably make hundreds of percent gains,” writes Paul Price on Real Money. “Qurate Retail (QRTEA) – Get Report, owner of QVC, Home Shopping Network and Zulily, is in that category right now.”
Price says he sees Qurate Retail doing very well in the market to come. What makes an investor like Price decide that a stock won’t just do well, it “can predictably make hundreds of percent gains”? In large part, he looks for places where the market just gets it wrong.
Price looks at the charts, the market conditions, why some “crazy mispricing” is out there, and why Qurate Retail is still a first-rate investment. Get the most of his analysis and investing ideas.
“QRTEA shares have come up nicely off their Covid-panic low, paid three special dividends worth a total of $4.50 per share yet are, surprisingly, still offered at a remarkably cheap valuation,” he writes.
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“From 2012 through 2020 cash flow per share doubled and EPS more than tripled. Over the past nine years, though, the stock is down 23.8% on a 'price only' basis and up just 11.3% cumulatively based on total return.
“Crazy mispricing like that rarely lasts long. It almost always gets arbitraged away via a catch-up move higher, or even a 'go-private' transaction.”
And Price thinks that history shows this kind of crazy mispricing definitely won’t last in the case of Qurate Retail.
Get more trading strategies and investing insights from Price and the other contributors on Real Money.
So what does Price look for? This stock is valued well below its historic rates. The market continues to believe that the stock will underperform compared to that history, but he sees nothing in Qurate’s performance as a business to bear this out.