Friday, December 16, 2005

Cendant (NYSE: CD) Is looking Pretty Sexy

Due to an announcement of management changes and technology development, Cendant took a hefty hit and even hit a new 52 week low on the 13th. This company like so many other's used to word "synergies" which is an excuse for companies that have nothing to do with each other to come together a long time ago. But now they're going forward with plans to split up and "unlock value", which was also supposed to result because of the synergies.

just like Altria (MO), which is also on its way to splitting up, this company will be worth a definite amount more when it's separate. While Altria (MO) should break par when it breaks up and I think is being well anticipated, the CD breakup has been less than fruitful.

Cendant when it breaks up should be worth somewhere between $20-$24.50, I consider it a buy anywhere below $17 (and it will most likely miss estimates next quarter by 3-5 cents a share). So by the time it reports it may be lower which could allow you to drop your cost basis if you're buying in levels. Did I mention you got a nice little dividend thats around 2 and a half percent yearly as well?

So CD buy below $17 and sell above $20, MO is still a decent but under $77, but I'd rather have it under $75.

I am not responsible for your trade decisions made or not made because of my opinion shared here. You should always do your own research before buying/selling a stock.


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