The latest consumer confidence numbers were a big surprise to Wall Street as consumers’ outlook continues to brighten — the latest sign that the economy is steadily, albeit slowing improving, and the latest sign that we could see a solid stronger recovery taking hold in the second half of 2013 and early 2014.
This brightening outlook is starting to show up somewhere most people would not think to look this soon, but Portfolio Grader spotted the trend as soon as it developed: Broadcast companies are starting to see rapidly improving fundamentals as advertisers ramp up spending in anticipation of stronger consumer spending later this year. The 2014 outlook for broadcast TV is also strong as we will see mid-term elections, the FIFA World Cup and Winter Olympics boost revenues.
Sinclair Broadcasting (SBGI) has been trying to expand its operations before conditions are fully recovered, and the stock has made a huge run, doubling year-to-date. SBGI recently announced it would be acquiring Fisher Communications (FSCI) to add Fisher’s 20 television stations and three radio outlets in the Pacific Northwest to its existing portfolio of 65 television stations in 39 markets throughout the United States. Sinclair’s aggressive moves in the past year are driving serious top- and bottom-line growth. Portfolio Grader has noticed — the stock currently earns an “A” grade, suggesting it’s a “strong buy.”
Belo Corp. (BLC) also garners Portfolio Grader’s top ranking. The company owns 20 TV stations and websites in 15 different markets, as well as three local channels and two regional news networks. Belo has stations with all the major networks and covers almost 15% of the national TV market. The company has exceeded Wall Street estimates for four consecutive quarters, and estimates for the rest of the year have been rising in the past few months. The strong recent results and improving expectations led to an upgrade in the past week, and BLC is now a “strong buy.”
Nexstar Broadcasting Group (NXST) owns or provides service to 72 stations in 18 markets across the United States. Its stations represent major networks and cover a little more than 12% of the television broadcast audience. In more than 60% of Nexstar’s markets, it provides news, service or sales support to a second station, allowing it to generate extra revenues from one marketplace. In late April, NXST announced it would be buying an additional 19 stations in a private transaction, increasing its presence in 10 markets across the company. Nextstar recently reported record results, and the stock has been highly rated by Portfolio Grader since the start of 2013. The stock remains a “strong buy.”
These companies and many others like them already have excellent fundamentals, and the picture should continue to improve for the rest of the year as advertisers continue to deploy more money into broadcasters.
Louis Navellier is the editor of Blue Chip Growth.