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More Growth Coming

News of a multiyear contract this morning points to this company's sweet position.
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This morning, OpenTV (OPTV) announced it has signed a multiyear licensing agreement with Comcast (CMCSA) to extend the deployment of OpenTV's AdVision. The stock is higher by 10% to $2.74, but we aren't taking any action here because we believe shares are undervalued relative to the company's leading position in the growing interactive television market.

AdVision performs continuous monitoring of local cable systems' available advertising inventory, facilitates traffic, scheduling and billing functions around the system's advertising insertion and provides maximum efficiency of spot placement and optimizing revenue management, OpenTV's press release said.

We believe the future of cable advertising will be targeted ads that hit a more receptive audience, with viewers able to make purchases directly through their cable provider. OpenTV is a leader in this space, and we expect the company to pursue similar deals with other cable providers.

In addition, we are beginning to see the news around interactive television pick up. Just last month, EchoStar (DISH) announced that it is launching an interactive shipping network with Sharper Image SHRP using an OpenTV application. And as digital cable hits critical mass, the appeal to use targeted advertising will increase and drive higher returns for everyone involved.

This deal confirms our belief that Comcast, despite having acquired an interactive hardware company in Liberate (LBRT:Other OTC), will still use applications from outside providers like OpenTV. We believe OpenTV, which already has a strong hold on the European and Australian interactive television markets, is a compelling way to play interactive television growth in the U.S., and we are glad we added to our position (now at 1,300 shares) at $2.61 a share just two weeks ago.

P.S. After posting better-than-expected results Tuesday, Revlon (REV) is getting a lift from the analyst community this morning. Most notably, Prudential raised its target price on the cosmetics play to $3.50 a share from $3 a share. We have already booked some nice gains in the stock and aren't taking any action here, as we expect shares to continue to trade higher as more investors buy into this early-inning turnaround story.

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