Corus: Poised for an uptick

The Stock: Corus Entertainment Inc.

Recent price: $19.03

Trend: If the medium is the message, the message is to buy media stocks. Although there are some conflicting signs of economic recovery in the United States, the bullish trend of consumer discretionary stocks highlights pockets of strength amid the market correction. The stocks of media companies -the broadcasters, publishers, and data information messengers of both gloom and boom - are heralding a positive picture to investors despite the tenor of much of their published headlines and viral sound bites.

The PowerShares Dynamic Media Portfolio , an exchange traded fund with holdings in major American media companies, has been Stock Trends Bullish for over a year, a period through which it has consistently out-performed the S&P 500 index. The stocks of mainstream media names like News Corp Ltd., Time Warner Inc., and Viacom Inc. rallied last week as they and other communications stocks fared well in a market showing nascent signs of recovery from the spring pullback.

Canadian media stocks are performing well, too. Showing revived strength last week was Thomson Reuters Corp., the hefty global media conglomerate hitting a new 52-week high. Its stock has been trading heavily since the beginning of May and is now up 21 per cent in 2010 after rallying off its primary trend line support.

Many other publishing stocks performed relatively well in the market correction, including Quebecor Inc., Torstar Corp., and Yellow Pages Income Fund. Also hitting a new high last week, the shares of Astral Media Inc. have been holding relatively steady in the market turmoil despite below average trading volume in the past month. Investors are apparently reading between the market lines and like the media story.

The Trade: Nobody likes to arrive late to a party - least of all investors. Shares of Corus Entertainment Inc. may offer trend traders an opportunity for a rewarding uptick. The stock is now Stock Trends Weak Bullish and is trading near its 40-week moving average trend line. High volume of trading last week showed signs of more concentration among buyers than usual and may portend of the underlying support as the stock consolidates.

The company's announced sale of its Quebec radio station assets to Cogeco Inc. at the end of April pushed Corus' shares to $21, but the stock has flagged since. Recent news of the entry of another bidder helped stir investor interest last week, although the stock finished the week unchanged. Traders heartened by the stock's current technical pattern hope the sector's strength will help carry the stock from a base near $18.75. Dialling in now would be a good entry point.

The Upside: A short-term move above $20 would return the Corus's stock to a Stock Trends Bullish category and may signal an opportunity to best the 2010 high. This optimistic view must be supported by additional trading activity, something that will likely be in short supply during the summer months. However, would it be too much to spy the $24 (post-split) level of the stock's last bull trend, culminated at the end of 2007, as a longer term objective?

The Downside: The company's sale of radio assets leaves its premium specialty television properties as the bread and butter of its future. A stronger economic picture helps buttress the stock, but any slip below $18 marks a change in tune and should prompt a trade exit.