The holiday season is wrapping up, the pandemic is still raging and we have several months of a gray winter to look forward to. So, between the weather and the novel coronavirus, people are going to stay indoors as much as possible. That means they’ll be consuming a ton of media for information and entertainment. And therein lies the opportunity for investors — assuming they can sniff out the right media stocks to buy.
As such, I have seven suggestions, ranging from a 170 year-old newspaper pioneer to the leading streaming video service. I have also included picks you might not think of immediately, like companies that deliver the media and one that makes it better.
Plus, each of these companies has at least a “B” rating in Portfolio Grader, so you know these are some of the best media stocks to buy if your aim is long-term growth.
- Cable One (NYSE:CABO)
- Charter (NASDAQ:CHTR)
- Dolby (NYSE:DLB)
- Fubotv (NYSE:FUBO)
- Liberty Broadband Series C (NASDAQ:LBRDK)
- Netflix (NASDAQ:NFLX)
- New York Times (NYSE:NYT)
Media Stocks to Buy: Cable One (CABO)
First up on this list of media stocks to buy is Cable One. This Arizona-based broadband provider offers internet, phone and cable TV services to over 950,000 customers in 21 states. The company is also active in both residential and business markets, working under its Sparklight and Clearwave brands.
Cable One is growing, both organically and through acquisitions. In its third-quarter earnings report, the company noted the closing of two recent acquisitions of regional telecommunications providers. CABO also posted big yearly gains. Those acquisitions helped boost residential customers by over 165,000 year-over-year (YOY) for a 26.7% gain. Revenue was also up 18.9% YOY.
Now CABO stock is up 51% year-to-date (YTD) in 2020 and up nearly 419% over the past five years. Finally, adding to its attraction, Cable One also pays investors a dividend. So, it’s clearly one of the better media stocks for investors focused on growth.
Charter is a broadband provider that operates in 41 states under the Spectrum Brand. With over 30 million residential and business customers, it’s one of the top three providers in the U.S. market. Demand for broadband access to internet and streaming video has helped CHTR stock achieve sustained growth. Shares are up nearly 35% YTD and 257% over the past five years.
Additionally, the company’s push into mobile internet access is also paying off. In Q3, Charter added 363,000 new mobile lines for a total of 2.1 million. Mobile revenue growth was also up 91.8% YOY in Q3.
The Wall Street Journal is tracking 28 investment analysts who are covering the name. They give CHTR stock a consensus overweight rating and an average 12-month price target of $704. That offers a modest 7.5% upside. However, based on this year’s 35% gain, I suspect they are being conservative.
Right now, the pandemic has proven that broadband access is more important than ever. Moreover, Charter’s impressive mobile growth will also drive ongoing gains. That makes this pick one of the better media stocks to buy.
Dolby is one of those companies that is immediately identifiable as a key part of the media landscape. You see the name everywhere. But this company doesn’t generate content nor does it deliver it. Instead, Dolby is primarily focused on making content sound better.
Whenever you see the Dolby logo on a product — a TV, a soundbar, a home or car audio system, headphones, a game console or something else — the company is collecting a licensing fee. And when it comes to the pandemic, people stuck at home and streaming shows or playing video games want the experience to be as immersive as possible. As such, they’ve been snapping up soundbars with Dolby Atmos for three-dimensional surround audio.
While that’s been good for business, though, the company has also been feeling the negative effects of the pandemic, with many movie theaters closed. In fact, Covid-19 has caused an overall hit to Dolby this year. Revenue for 2020 was $1.16 billion, down about 6.5% from the $1.24 billion it made in 2019.
However, DLB stock has still posted an impressive gain of 41% YTD. Plus next year, with positives like a vaccine and the iPhone 12 now supporting Dolby Vision, there may still be upside for this media creation and consumption stock. Even if a theater recovery is already priced into the current value, five-year growth of 183% suggests this pick of the media stocks to buy is worth considering for its long-term prospects.
Have you heard of FuboTV? If not, think Netflix but for live sports. Now, you would imagine that during a pandemic year — when professional sports have been highly impacted — FUBO might be feeling some pain. Instead, it’s actually been the opposite.
In fact, sports-starved consumers are forking over their cash for FuboTV subscriptions. In Q2, the company reported that paid subscribers topped 286,000. That’s a 47% YOY increase. Additionally, revenue was up 53%. More specifically, advertising revenue posted a 71% gain year-over-year.
On top of that, as professional sports leagues slowly began to return to action, FUBO reaped further rewards recently. In Q3, it exceeded guidance and delivered one of its best quarters ever. Paid subscribers hit 455,000 while revenue of $62.1 million was up 47%. Advertising revenue grew by 153%.
FUBO stock was flat through most of 2020. However, the Q3 results kickstarted a rapid growth cycle. That increased as the company gained visibility and rumors began to swirl about it signing a deal for exclusive sports coverage.
So, after spending most of the year in the $10 range, FUBO stock took off in November. Now after a correction, it still stands at around 230% YTD growth at $29.30. Based on its pandemic performance, increased visibility and the possibility of an exclusive deal in the future, FUBO is one of those media stocks to buy that has big growth potential.
Liberty Broadband Series C (LBRDK)
Next on my list of media stocks to buy is Liberty Broadband, a name that owns or invests in a range of communications businesses. The company’s holdings include a 29% stake in the previously discussed Charter. It also owns 100% of both GCI — an Alaskan telecommunications provider — and Skyhook, a global mobile-positioning company.
In its third quarter, Liberty Broadband reported revenue up just over 13%. What’s more, the pandemic has had relatively negligible adverse effects on its business:
“We are not presently aware of any events or circumstances arising from the COVID-19 pandemic that would require us to update our estimates or judgments or revise the carrying value of our assets or liabilities.”
Right now, LBRDK stock has had 26% growth so far in 2020. What’s more, analysts covering the stock have rated it as a consensus buy. Their median price target of $182 has 16% upside, showing confidence that this is one of the better media stocks to buy with a solid growth trajectory.
You can’t talk about media stocks to buy in 2020 without mentioning the company that kicked off the video streaming era. Of course, Netflix has had some big positives this year, but it has also faced challenges that scared off some investors.
The first two quarters of 2020 brought a surge in subscriber growth as pandemic lockdowns boosted demand for entertainment. That slowed in Q3, but the unexpected gains were still a big win for the year. They helped soothe fears that the dramatic increase in streaming competition would drag Netflix down. In addition, Netflix saw cash flow significantly improve in 2020. Right now, the company is approaching the point where it can finance its own productions without having to borrow money. That is a good sign for long-term sustainability.
After early gains and a roller-coaster summer and fall, NFLX stock is showing growth of nearly 67% YTD. You can’t argue with that kind of performance. Plus, currently NFLX is still well off its 52-week high. That makes it an even more attractive buy.
New York Times (NYT)
Last on this list of stocks is the old gray lady of media — the New York Times. Now, NYT may be the last company many people think of when it comes to media stocks to buy. Streaming video companies, sure. But a newspaper?
Here’s the thing. People still want to read the news –it’s just that they want to do it on their tablet, phone or laptop. Recognizing that trend, the New York Times is doing a far better job than most in transitioning to the digital world. More importantly, it’s doing a far better job of convincing people to pay for access. The news organization first launched a paywall in 2011.
Just in November, it also announced it had reached a significant milestone in digital transformation. For the first time ever, revenue from its digital subscribers surpassed revenue from print subscriptions. Those 7 million digital subscribers helped the company to double net income in the last quarter, even though advertising revenue continued to slowly slide.
Despite plummeting in the early 2000s as ad revenue fell and the future of newspapers was in doubt, NYT stock has been in growth mode for the past five years. Currently, it’s up 61% YTD. So, this name is well worth considering if you’re looking for a media stock that can survive and thrive in a rapidly transforming marketplace.
On the date of publication, Louis Navellier had a long position in CABO. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system —with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.