The shares of this cable giant were just upgraded to ‘Buy’ by Argus. Analysts have an $84 price target for the stock, and five have recently raised their 2016 earnings forecasts for the company.
From DRIP Investor
During tough market environments, investors must remain vigil in finding opportunities among the rubble. One area to hunt for good stocks is to focus on companies reporting positive earnings results whose stocks are still selling off with the rest of the market. Such stocks should be among the leaders when the market rebounds.
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 company’s latest quarterly report. Revenue rose 8% in the fourth quarter, with the firm seeing strength across its platform of businesses. Cable revenue rose 6% in the quarter. The company registered its best video customer results in eight years, with the firm showing a net gain of 89,000 video customers in the quarter. Comcast added 460,000 high-speed Internet customers during the quarter, the best result for a fourth quarter in nine years. For 2015 overall, customer relationships increased by 666,000, an 86% improvement compared to net additions of 358,000 in 2014.
The additions among video subscribers were 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. Filmed entertainment revenues rose nearly 26%, while theme park revenues jumped nearly 39%.
Reflecting the company’s confidence in the future, the dividend was increased 10%. The company also plans to repurchase $5 billion of stock in 2016.
Comcast had the misfortune of announcing its solid earnings during a market environment when investors seem to be focusing only on negative news. The stock is down roughly 11% from its 52-week high. While it is possible Comcast stock could trend lower in the near term if the overall market continues to weaken. These shares offer good value for patient investors. The yield of nearly 2% enhances total-return potential. The stock is a buy at these levels, and price breaks below $50 should be used for aggressive accumulation of the stock.
Comcast offers a traditional dividend reinvestment plan. Investors must own at least one share, and have the share registered in their own name, in order to enroll in the dividend reinvestment plan. There is a minimum $50 investment when buying stock in the plan. Alternatively, shares may be purchased via a broker. The transfer agent for the plan is Wells Fargo Shareowner Services— (888) 883-8903.
Charles A. Carlson, CFA, DRIP Investor, www.dripinvestor.com, 800-233-5922, March 2016