Here’s the Perfect Spot to Buy Comcast Stock — And 3 Reasons to Do So

Comcast stock is one to have on your buy list

Hulu offers little for CMCSA stock

Source: Mike Mozart via Flickr

Now that the Disney (NYSE:DIS), Comcast (NASDAQ:CMCSA) and Twenty-First Century Fox (NASDAQ:FOX, NASDAQ:FOXA) drama is (mostly) over, Comcast stock has been able to enjoy some solid gains.

Even though we have been buyers of Disney, that doesn’t mean we didn’t like Comcast. The cable conglomerate owns Universal Studios, NBC and other prime assets. It actually has multiple catalysts that make it an attractive long position now that it’s done with its bidding war with Disney.

In a way, it’s good that Comcast didn’t win, given that the price went from ~$50 billion to ~$70 billion from start to finish.

Disney is happy to win the war, but it certainly lost a few battles by having to fork over so much extra cash. In any regard, let’s explore CMCSA stock, starting with the chart.

Trading Comcast Stock

chart of Comcast stock, Comcast stock price
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After putting in that nice double bottom near $31 in May and June, the Comcast stock price has been on fire. Shares are now changing hands near $36, as CMCSA has been in a solid uptrend. Additionally, it got above and held the $35 level, a mark that’s proved significant over the past 12 months.

So where do we buy? I’d love to step into Comcast stock on a decline to that $35-ish area. Should it get there, CMCSA has plenty of moving average, trend, and level support to lean on. But the strong chart is just one reason to like Comcast. Here are three more.

Valuing Comcast Stock

Comcast stock trades at just 14 times earnings. That’s despite estimates calling for 23% earnings growth this year and 10% growth in 2019. On the revenue front, estimates call for almost 6% growth this year and 2% growth in 2019.

Comcast isn’t knocking anyone’s socks off with its revenue growth, but earnings are impressive. Double-digit growth expectations for the next two fiscal years and a sub-15 P/E ratio are all attractive in my book.

Growth and valuation? Check.


Comcast stock may yield “just” 2.1%, although those who bought earlier this year are sitting on a much more attractive payout. Still, there’s nothing wrong with a 2.1% dividend yield, particularly because Comcast management increased that payout by 21% this year.

The company also announced a $5-billion buyback for this fiscal year in January. That’s not necessarily peanuts for a $165-billion company, although it won’t move the needle much. All in all, management is showing its willing to return capital to shareholders, and the dividend should be seen as a nice bonus to a solid fundamental story.

M&A Potential

The third and final reason to like Comcast stock? M&A.

In 2001, Comcast got into broadband, in a $44.5-billion deal with AT&T (NYSE:T) that propelled its internet business. In 2004, CMCSA tried to buy Disney but met resistance from shareholders as well as Disney, before buying 51% of NBCUniversal in 2009 (and ultimately acquiring all of it in 2013). Two years ago, it bought DreamWorks, while a number of smaller deals have been accretive.

Unfortunately for Comcast, a number of larger high-profile deals have fallen through over the years, either from a regulatory standpoint or an all-parties-agreement standpoint. But the point is that management, led by CEO Brian Roberts, is good at M&A.

Following the no-go on FOX, Comcast is now focusing on Sky Plc (OTCMKTS:SKYAY), a UK-based broadcasting company. Disney CEO Bob Iger had previously called Sky the “crowned jewel,” under the belief that Disney would get both Fox and Sky in its acquisition deal, given that Fox owned a large stake in Sky and was looking to acquire the rest of it.

Well, now Comcast may win that battle and add a premium name to its list. Other companies, like Lions Gate Entertainment (NYSE:LGF.A, NYSE:LGF.B) with it $3.5-billion market cap, could be in Comcast’s scopes, too. Either way, M&A should help bolster growth for this low-valuation media conglomerate.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell was long T. 

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