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JimVanMeerten (56.34)

Rovi Corp (ROVI) breaks all the rules



September 29, 2009 – Comments (0) | RELATED TICKERS: MSFT , RNWK

Every once in a while I run into an opportunity that breaks all the rules I have for investing on my newsletter Financial Tides. Rovi Corp (ROVI) is a prime example of a stock investment that blows my mind. I'm old school, I try to think like Warren Buffet. Buffet has a rule: Don't invest in a business you don't understand. I don't understand ROVI and that's what fascinates me.

When I graduated with an accounting degree from Berry College in 1970 the business machine lab had just bought a state of the art Frieden electronic calculator and it costs $2,500. It had the same function as a $3.95 calculator you can buy now. It was as big as an IBM Selectric typewriter, the one with the letters on a ball instead of the letters on the end of little arms. I bet I've lost 3/4's of you with this history lesson, but at that time there were no business PC's and most businesses still has comptometers instead of those new fangled electronic calculators and typewriters with a correcting tape had just been invented.

The electronics we have now wasn't in any ones imagination, at least none of the geeks I hung around with.

ROVI, formerly called Macrovision Solutions, makes and develops products that protect, enable and distribute digital goods to consumers. The company is revolutionizing the digital entertainment industry including TV, movies, music and photos and how they are distributed and used. Just look at this clip I found on Forbes: Rovi: Transforming business entertainment.

Click on it and you get an idea of what ROVI can do.

Fundamental analyst like it too. Of the 13 that follow this stock there are 6 STRONG BUYS, 6 BUYS and only 1 HOLD. Last year ROVI lost 2.40 a share but estimates are for a profit of 1.48 this year and maybe 1.87 next year.

On the technical analysis side BarChart's TA indicators are 13 for 13 for a 100% BUY signal. I like the 9 new highs in the last 20 trading sessions and the 4 of the last 5 sessions are impressive.

I'm fascinated (but don't fully comprehend) the products, I like the fundamental numbers and the TA indicators are solid. This stock is a holding in my Marketocracy S&P 400 portfolio.

Recommendation: BUY ROVI around 33.50 with a protective stop loss at 29.

Jim Van Meerten is an investor who writes about financial subjects on Financial Tides, MSN Top Stock Blogs and Seeking Alpha. Please leave some comments below or email to

Disclosure: I do not own the stocks I blog about but do hold them in Marketocracy portfolios for accountability of my recommendations. At the time of publication I own no shares of ROVI.

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