Media Favorites: Comcast & Disney
03/11/2016 7:00 am EST
One area to hunt for good stocks in a tough market is to focus on companies reporting positive earnings results whose stocks are still selling off, notes Chuck Carlson. In his DRIP Investor, the advisor highlights a duo of favored media stocks.
Comcast (CMCSA), the cable giant, has pulled back with the market and most media stocks. Nevertheless, investors who are selling now are overlooking the strong operating momentum at the company.
Evidence of this momentum was the latest quarterly report. Revenue rose 8%, with the firm seeing strength across its platform of businesses.
The company registered its best video customer results in eight years; this was especially impressive given the cord-cutting fears Wall Street has for cable providers.
The company’s filmed entertainment and theme park businesses were quite strong as well.
Reflecting the company’s confidence in the future, the dividend was increased 10%. The firm also plans to repurchase $5 billion of stock in 2016.
While it is possible Comcast stock could trend lower in the near term, these shares offer good value for patient investors. The yield of nearly 2% enhances total-return potential.
Walt Disney (DIS) is providing an excellent buying opportunity for investors who are willing to ride through near-term volatility for what should be a nice long-term payoff.
Indeed, few companies in the world have the brand power of Disney, and the firm has been masterful in monetizing those brands.
Disney is a major player in media, parks and resorts, filmed entertainment, and consumer products. All of these units showed solid revenue growth in the most recent quarter, fueled by 46% growth in filmed entertainment.
The movie segment should continue to put up good numbers for the next several years, driven by future installments of the Star Wars franchise as well as a new installment of the firm’s massive Frozen franchise.
The one area where Disney is not hitting on all cylinders is the media/cable operations. Its ESPN sports network has been in the crosshairs of Wall Street, as cord cutting has reduced subscriptions to the network.
Bit one thing that cannot be disputed is the importance of content in a changing media landscape, and Disney has the content distributors want.
The potential upside seems to far outweigh any further downside risk. The stock, yielding 1.5%, fits in any portfolio and is an especially nice selection for a portfolio geared toward a young investor.
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