Liberty Global: Media Breakout?

11/11/2013 7:00 am EST


Leo Fasciocco

Investment Columnist and Publisher, Ticker Tape Digest

Though based in California, our latest featured stock is one of the largest cable TV operators, in terms of subscribers, outside the US, observes Leo Fasciocco, editor of Ticker Tape Digest.

The company, Liberty Global PLC (LBTYA), owns interests in broadband distribution and content companies in Europe, Asia, and Latin America, although the company is based in California.

With earnings set to soar this year, is poised for an upside breakout and we suggest accumulation in anticipation of a move to a new high.

From a peak of $45 in 2008, the bear market pulled it down to $9. The stock turned up in mid-2009, and has been a star performer, having made almost a nine-fold move. A push to a new high on a breakout could bring in more buying.

This year, analysts are forecasting a 65% surge in net to $1.30 a share from 79 cents a year ago. The stock sells with a price-earnings ratio of 62. We see that as high, but okay, given the earnings growth rate.

Looking out to 2014, profits are projected to soar 127% to $2.96 a share from the anticipated $1.30 this year. That is an acceleration in annual earnings growth, which is bullish.

The acceleration in earnings growth will also show up on a quarterly basis. Net for the third quarter should climb 30%, and then, in the fourth quarter, soar 266%.

Institutional sponsorship is very good. One of the largest fund holders is Fidelity Contrafund; the 4-star rated fund was a recent buyer of 278,600 shares.

Another key buyer recently was 5-star rated Artisan International Fund which purchased 584,074 shares.

Overall, we rate LBTYA a good intermediate-term play, provided earnings meet expectations.

We suggest accumulation of a partial stake in LBTYA, with further buying to be done on a breakout over $82.30. We are then targeting LBTYA for a move to $105, after a breakout. A protective stop can be placed near $75.

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