Comcast: Best of the bunch

From cable to theme parks, this company is a quality entertainment and media stock.

By MoneyShow.com Oct 11, 2013 2:17PM
MoneyShow.comComcast truckBy Chuck Carlson, DRIP Investor

I like entertainment and media companies, and Comcast (CMCSA) is is one of the best of the bunch; the company has its tentacles in a host of businesses, from cable television and network broadcasting to filmed entertainment and theme parks.

Comcast is the nation's largest video, high-speed Internet and phone provider to residential customers under its XFINITY brand. The company's broadcasting and cable assets include big brands like NBC, Bravo and USA, while other household names under its ownership include Universal Pictures, Universal theme parks and the Philadelphia Flyers NHL hockey team.

At a time when some satellite and cable providers are concerned about consumers "cutting the cord," Comcast has a number of competitive advantages.

For starters, the company's high-speed Internet services, often bundled with cable services, help retention and provide a business that continues to see nice growth. Further, the NBC Universal business brings original content into the mix, a valuable weapon in the entertainment and media wars.

The second quarter was especially impressive on several fronts. Per-share profits rose 30 percent to $0.65. Total revenue rose 7 percent.

Free cash flow was up 25 percent to nearly $2 billion. Comcast's ability to generate lots of cash has allowed the firm to shrink the number of outstanding shares by more than 20 percent over the last decade.

Strong cash flow has also afforded ample dividend growth. The quarterly dividend has nearly tripled since 2009. I would expect another dividend increase within the next nine months. The current yield is 1.8 percent.

Comcast sports impressive Quadrix numbers (our quantitative ranking system), with an overall score of 93 (out of a possible 100), value of 73, and momentum of 84. Such broad-based strength should continue to prove rewarding for investors.

The shares have performed well this year, and I see the stock outperforming the market over the next 24 months. I would be a buyer of the stock at current prices and buy more aggressively on dips below $40.

Note that Comcast offers a traditional dividend reinvestment plan, in which an investor must be a shareholder of record in order to join the plan. Once in the plan, minimum investment is just $50.

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1Comment
Oct 13, 2013 6:34PM
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Check out the competition before you go Comcast. There are less expensive internet services that are as good as or better then Comcast. 

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