Do cable stocks have the right stuff?
These companies are in play, but is that enough to keep them going?
By Neal Rau, Stock Traders Daily
Cable and media stocks are surging higher as merger and acquisition talks are flooding the industry. Liberty Media (LMCA) is exploring options in which Charter Communications (CHTR) will take over Time Warner Cable (TWC).
Liberty Media holds 27% of Charter Communications and since that acquisition, analysts and investors have speculated on industry consolidation. Time Warner Cable is not the only pay-TV distributor Charter is eying-up.
Most of the consolidation talk in the industry surrounding Charter Communications, Time Warner Cable and Cablevision (CVC) is the desire to be more like Comcast (CMCSA). The parent of NBC reported yet another strong quarter on Wednesday, pushing the stock up more than 5%. Comcast's second quarter lost fewer video subscribers from the year before, while it managed to increase revenues.
During the conference call, Brian Roberts, Comcast's CEO, said, "We made up relative performance versus our other competitors." Some of NBC's competition for ad dollars includes Walt Disney's (DIS) ABC, CBS (CBS) and 21st Century Fox (FOXA) among broadcast networks.
The Walt Disney Company is expected to report substantially higher second-quarter profits on August 6. Disney has enjoyed huge ad growth at the virtually competition-free ESPN. Disney is expected to post net income of $1.39 billion, or 76 cents a share, for the period ended March 31. That's a 31% increase from $1.14 billion, or 58 cents a share, for the same period last year. Analysts polled by Thomson Reuters expect Disney's revenue to rise 8.9% to $10.48 billion from $9.63 billion a year earlier. Stock Traders Daily's report on DIS shows it neutral near term, but that can change with earnings, and we will be monitoring it.
The combination of strong earnings and industry consolidation can continue to draw investors into cable and media stocks.
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These hot movers could rise by double digits in coming months.
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