Navellier Finds a Direct Play on HD

02/16/2007 12:00 am EST

Focus:

Louis Navellier

Editor, Blue Chip Growth and Emerging Growth

Louis Navellier says his "sleeper stock" for 2007 is a great way for investors to profit from all those high-definition TVs flying off the shelves at electronics retailers...

Louis Navellier's 2007 Predictions:

2007 High 2007 Low 2007 Close
Dow Jones Industrial Average 14,827 12,632 14,374
Standard & Poor's 500 1,874 1,396 1,794


 

Favorite Stock for 2007:
DirecTV Group (DTV)

Around this time of year, I'm always asked, "Louis, what is your top pick for 2007?" Well, I'm not a fan of encouraging folks to invest in just one stock--I believe in a diversified portfolio.

But when I answer that question for folks, I'll tell them about a great stock I like to call a "sleeper stock." It's not popular among Wall Street investors, but I think it's going to be a tremendous performer in 2007.

DIRECTV Group (DTV) continues to capture market share throughout the United States due to its incredible array of high-definition programming choices. In fact, you almost have to use DIRECTV if you want to watch all the football games and other popular sporting events in high-definition, regardless of where you live. DIRECTV's satellite dishes have recently gotten larger so they can carry even more high-definition stations. Itplans to offer up to 150 high-definition TV channels this year.

John Malone's Liberty Media, which is in the television programming business (QVC, etc.), just swapped its 19% stake in Rupert Murdoch's News Corporation for a 39% stake in DIRECTV. When one of the oldest cable pioneers switches sides to the satellite TV business, that tells you something. Both Rupert Murdoch and John Malone believe that DIRECTV is the best and most cost-effective platform for launching new television channels.

In the old days, Rupert Murdoch had to pay cable companies a substantial amount of money to launch new television [channels] such as Fox News. A decade later, that investment was obviously well worth it. However, the restricted number of cable stations essentially limits programming alternatives, which will be growing and prospering on DIRECTV.

In short, DIRECTV will always offer more programming choices than cable. Thanks to its new and improved satellite dishes and receivers, DIRECTV will offer the most high-definition programming choices, which will continue to expand dramatically.

On the other hand, most cable companies will be fighting with limited bandwidth, unless they can upgrade to expensive optical lines. Just as cell phones are taking the place of land-line phones, DIRECTV will continue to capture market share from cable companies, whose only ally nowadays seems to be heavily forested areas--because pesky trees interfere with DIRECTV's satellite signal.

The stock has taken some hits lately from a downgrade and negative analyst chatter, but with current-quarter growth expected to triple in the overall industry, its temporary pullback offers us a chance to buy DTV at a phenomenal price below $26.

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