5 TV Stocks That Netflix, Inc. Can’t Beat

Cord cutting is hitting traditional TV operators, but there are value opportunities emerging

By Tom Taulli, InvestorPlace Writer & IPO Playbook Editor

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Sooner or Later This Obvious Flaw Will Catch up to Netflix Stock

Source: Netflix

There seems to be no letup in the powerful momentum with Netflix, Inc. (NASDAQ:NFLX). During the latest earnings report, revenues jumped by 43% and the company added 7.4 million new subscribers. The current membership base is now at 125 million.

Of course, NFLX stock has been red-hot. For the year so far, the shares are up 72%.

Going forward, NFLX plans to double down on its growth. To this end, the company expects to shell out $10 billion on content and marketing.

Given all this, it should be no surprise that investors are concerned about traditional media operators. After all, there are also other emerging TV internet stocks that are crowding the market, like Roku Inc (NASDAQ:ROKU). There are also mega tech companies that are making a play for the category, such as Apple Inc. (NASDAQ:AAPL), Facebook, Inc. (NASDAQ:FB) and Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG).

So with the ongoing trend of cord cutting, might there be a disruption?

Well, perhaps so. But this still seems kind of an exaggeration. The fact is that traditional media companies still have strong assets — and many are making aggressive moves into streaming.

OK then, so what are some of the TV stocks that look interesting right now? Here’s a look at five.

TV Stocks to Buy: Disney (DIS)

TV Stocks to Buy: Disney (DIS)
Source: Shutterstock

It’s amazing that Walt Disney Co’s (NYSE:DIS) market cap is only $9 billion higher than NFLX’s. But then again, this does highlight that DIS stock looks like a good value.

After all, the company has recently launched a streaming service for ESPN. While it is likely to be a niche — as the focus is on avid sports fans — it should be a good way to experiment.

But of course, the company’s mainstream offering will come next year. It certainly helps that DIS has a treasure trove of content. Just some of the brands under its umbrella include Pixar, Marvel and the Star Wars franchise from George Lucas.

It seems like a pretty good bet that the streaming service will get quite a bit of traction. This will not only provide a source of recurring revenues — which should help to offset the erosion from cord-cutting — but also provide valuable data on viewer activities.

In the meantime, DIS will have the advantages of other strong businesses, such as the studios, theme parks and consumer products.

TV Stocks to Buy: CBS (CBS)

Founded in the late 1920s, CBS Corporation (NYSE:CBS) has been able to successfully manage through the changes in the media industry. The key has always been to create compelling content.

And the good news is that the current CEO, Leslie Moonves, has a proven track record with this. According to InvestorPlace.com’s Lawrence Meyers, Moonves has been spot-on to “brand the network.” This has involved developing programming that focuses on “crime shows, with a sprinkling of the standard doctor and lawyer fare.”

But Moonves has also been creating his own streaming platform, which has been making progress. The CBS All Access and Showtime services have about 5 million members and are projected to reach 8 million by 2020.

Although, this could be accelerated with the acquisition of Viacom, Inc. (NASDAQ:VIAB), which has a rich set of content assets like Paramount Studios, MTV, Comedy Central and Nickelodeon. True, the deal is far from guaranteed. But over the years, Moonves has proven to be quite skilled with dealmaking.

TV Stocks to Buy: AT&T (T)

TV Stocks to Buy: AT&T (T)
Source: Shutterstock

Through transformative acquisitions and internal investments, AT&T Inc. (NYSE:T) has become a major player in traditional media. The company has also been leveraging its assets into creating its own internet TV service, DirecTV NOW. In the first 13 months of its launch, it has added close to 1.2 million paying subscribers.

No doubt, a key part of the company’s growth strategy is to acquire Time Warner Inc (NYSE:TWX). While it is embroiled in litigation with the Justice Department, it still looks like the deal will get done.

And yes, it should provide some major benefits. TWX brings with it the Warner Bros. film studio, which grossed over $5 billion last year; the HBO platform, which grew by 5 million subscribers in the most recent quarter; and other cable channels like TBS, Cartoon Network and TNT. There will also be synergy with T’s massive mobile user base of 142 million.

Finally, AT&T sports an attractive dividend yield at 5.7%. Note that the company has raised the payout for 33 consecutive years.

TV Stocks to Buy: Comcast (CMCSA)

It has been an awful year for Comcast Corporation (NASDAQ:CMCSA), with the shares off about 16%. Yet this does look like an opportunity for investors, especially for those with a long-term view of things. Consider that that the multiple on CMCSA stock is at a reasonable 12X. All in all, it seems that investors have baked in much of the problems with cord cutting.

Like Disney, CMCSA has a set of diverse assets, which should allow for continued growth in revenues and cash flows. There are the theme parks like Universal Studios and the film studio, which generated more than $5 billion in global box office receipts last years. Then there is the broadband business as well as the mobile phone segments.

As for the internet TV initiatives, CMCSA is certainly not sitting still. At the heart of this is the X1 video platform, which includes close to 60% of its TV customers.

Interestingly enough, CMCSA has recently forged a partnership with NFLX! In the deal,
Comcast will bundle the streaming service for its cable, phone and internet offerings.

TV Stocks to Buy: Dish (DISH)

DISH Network Corp (NASDAQ:DISH) continues to feel the pressures from cord cutting. Although, the company has been investing in its own service, called Sling TV. It’s an attractive offering that is at a reasonable price point. So far, there are 2.2 million subscribers, up 47% on a year-over-year basis.

However, the real value for DISH is its large holdings of spectrum. The recent bidding war for Straight Path Communications Inc is an indication of how valuable this asset is likely to be.

Basically, it would not be a surprise that DISH ultimately becomes the target of a buyout as well. And perhaps the most ideal suitor is Verizon Communications Inc. (NYSE:VZ).

Tom Taulli is the author of High-Profit IPO StrategiesAll About Commodities and All About Short SellingFollow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2018/04/5-tv-stocks-that-netflix-cant-beat/.

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