2. Salem Communications Corporation (SALM)
Buffett has always had a thing for media companies, especially newspapers. Berkshire Hathaway still owns the Buffalo News, which Buffett purchased in 1977.
But if Buffett were young today, he may be more interested in other media platforms, including the Internet.
Salem Communications is the largest Christian and conservative radio broadcaster in America. Founded in 1986, it operates 101 radio stations in 39 markets. It also operates an Internet and publishing divisions, including Christianity.com, Jesus.org and Christian videos at GodTube.com. It’s publishing division includes FaithTalk Magazine and Preaching and Townhall Magazine.
On Nov 5, it reported third quarter results which saw revenue rise 3.1% to $58.5 million. Radio revenue increased just 0.3% but that was because the heavy political ad buying of last year was absent. In it’s fourth quarter guidance, the company also cited the loss of political ads as a drag on revenue.
But Internet sales were the big driver for the quarter, rising 20.4% to $9.4 million from $7.8 million.
While the company is expected to lose 21 cents a share this year, earnings are forecast to soar by 397% to 63 cents in 2014.
The company has no forward P/E due to the expected loss in 2013. But its other valuation metrics are still attractive. Salem also pays a dividend, currently yielding 2.5%, which is rare for a company of its size.
- Forward P/E = N/A
- P/B = 1.1
- P/S = 0.9
- Zacks Rank #2 (Buy)
- Market Cap: $224 million