Stock bargains the pros like now

To the stars

If you don't know much about EchoStar (SATS, news, msgs), you're not alone. The company has virtually no analyst coverage, and its CEO, Charles Ergen, keeps a low profile. But down at these levels, Glenn Tongue at Tilson Focus Fund (TILFX) suggests putting EchoStar on your radar screen because he thinks it's a screaming buy.

Spun off from satellite TV company Dish Network (DISH, news, msgs) at the start of the year, EchoStar is a mix of a satellite business, a digital broadcast business, $1.1 billion in cash, nearly a half billion dollars worth of investments and a consumer-products division offering devices used in home entertainment.

By Tongue's calculation, the company now trades for substantially less than the value of just its cash and the satellite and broadcast businesses. He puts the value of these components at $25.60 a share. The stock recently traded for $20.50. So anyone who buys the stock now gets all the rest "for free," and then some. How much is the rest of the company worth?

EchoStar sells set-top boxes primarily to Dish Network, a business Tongue believes is worth as much as $2.4 billion. EchoStar also has a product called Sling that acts like a TiVo device and broadcasts digital signals throughout the home. Tongue thinks Sling is worth at least the $380 million that Ergen and Dish Network paid for it last October. Combined with the investments and other technology, the parts you are getting "for free" are worth anywhere from $25.60 to $36.60 a share, Tongue says. The key takeaway: The whole business is worth $51 to $62 a share, for potential gains of 150% to 300% from here.

Moving on

At some point, the housing market will get back to normal. When that happens, the Internet will still be here, and so will Move (MOVE, news, msgs), whose Realtor.com site helps buyers and sellers get together through an exclusive partnership with the National Association of Realtors, which shares its property listings. Given the potential for this company when the real-estate market does come back, there's no reason it should be selling at $2 a share, says David Nierenberg of Nierenberg Investment Management, which holds the stock.

Move makes money by selling advertising space to real-estate brokers, as well as software to help them run their businesses. Move is doing to newspaper real-estate advertising what Monster.com did to employment advertising in newspapers: taking it over wholesale.

"The volume of homes sold has declined by 50% in the past two years, but revenue at Move has been flat to rising while newspaper classified advertising has tumbled double digits," Nierenberg says.

He believes a combination of cost cuts, share buybacks, big accumulated losses that can offset earnings to lower taxes and a housing market recovery could drive the stock up to $10 over the next several years. "Once the real-estate market bottoms and starts to come back, the company will enjoy a significant liftoff," Nierenberg predicts.

Throwing in the company for free

Biopharmaceutical company QLT (QLTI, news, msgs) is an example of a company that trades for less than the value of the cash it has on hand. It sells for $2.60 a share, but it has at least $3 a share in cash, says Atticus Lowe of West Coast Asset Management. So at these prices you get the rest of its businesses for free. They include a prostate-cancer treatment called Eligard, which should soon be sold for an expected $100 million to $150 million, Lowe says. That will bring cash to about $4.70 a share.

After that, QLT will still have a laser treatment for macular degeneration called Visudyne. Sales declined sharply in the most recent quarter, but the business is still worth $2.70 a share, Lowe believes. QLT also has medical devices called Punctal Plugs -- placed in tear ducts to treat glaucoma and dry eye -- that are worth $1.35 a share. In all, that makes the company worth $8.75 a share for potential gains of more than 200% from here.

At the time of publication, Michael Brush did not own or control shares of any company mentioned in this column.

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