Today we have a new buy and a sell from Stephen Leeb.
Twenty-First Century Fox (FOXA)
from The Complete Investor
Twenty-First Century Fox is one of the two companies created when Rupert Murdoch’s News Corp. split itself into two, and it got all the fast-growing media and content assets. It’s arguably the most international major media play, with about 42% of revenues generated outside the U.S. More than 30% of its international operations are in the fastest-growing, largely untapped markets of Asia and Australia, which currently account for about 15% of total revenues. Notably, Fox’s movie studio has by far the biggest market share in China, larger than the shares of the second- and third-biggest players combined. With its European transmission assets, Fox is also one of most vertically integrated media plays.
Above all, Fox leads in content and distribution. It owns by far the most profitable major movie studio, helping explain Fox’s success in original television programming. Fox is the only media company to establish a new major network since the TV age began. Not surprisingly, its cable assets and programming are first-tier. Fox’s dominance in sports lets it reach more men than any other network and is a great advantage, since sports is an area where viewers usually want to watch in real time.
We expect Twenty-First Century Fox to grow rapidly over the next three to five years while generating large and rising amounts of free cash flow. By fiscal 2016 profits could top $2.50 a share compared to the $1.36 in the fiscal year completed in June, while free cash flow yield could top 8%.
Buy up to $37.
Stephen Leeb, PhD., The Complete Investor, www.completeinvestor.com, 866-833-2070, November 2013