Cable is clearly not dead. Yet, it is that false belief that has kept Comcast (CMCSA - Get Rating) shares pressed below their fair value…which is one of the reasons why this is such a compelling stock at this time.
My goal today is to dig deeper into the attractiveness of these shares. The best way I know how to do that is by exploring all 4 components of their POWR Ratings to see what it tells us about the future potential of Comcast shares.
Buy & Hold Grade = A
This factor focuses on the long term momentum because a stock in motion likely stays in motion. Especially a larger firm like Comcast where things evolve a bit more slowly than a smaller, nimbler firm.
In this case we see steady performance of shares that have 23.6% this past year and nearly 72% the pat 5 years. No doubt the track record of 19 earnings beats out of the past 20 quarters has a lot to do with these results. This historical strength bodes well as a base for likely future outperformance.
Trade Grade = A
Under the heading “what have you done for me lately?” CMCSA has rallied +25.97% on the year. That’s well above the market average. Plus, it has held up well under the strain of the most recent market pullback.
That makes sense when you consider that these downdrafts lead to a “Flight to Quality”. And yes, it is fair to say these are quality shares, which is why it is one of the most recent additions to the Reitmeister Total Return portfolio.
Industry Rank = B
Stocks are typically jugged by the company they keep. So it’s important that they are in an attractive industry group. Gladly that is the case with their “Entertainment- TV & Internet Content” group that is ranked #37 out of 123 industries. In general, this group is pretty far removed from the concerns erupting from the US-China trade dispute which makes it easier to start positions at this time.
Peer Grade = A
This is a modest sized group with just 14 stocks in total. Yet according to our analysis Comcast sits atop the stocks in the industry. Right below are some other attractively rated shares in: ATUS and CABO.
POWR Rating = A (Strong Buy)
Not surprisingly, the sum total of these 4 components translates to a Strong Buy rating in our model. The main reason is straight forward…Quality Management. That is how a large firm like Comcast can stay on track for so long.
Realize that this management team has helped diversify the firm beyond cable into many other aspects of media, entertainment and communications. The move into wireless communications is also showing signs of healthy growth.
The latest beat and raise quarter showed broad based improvements across nearly all their business units. With that shares quickly sprinted to new highs at $45.30. But thanks to the market pullback we can get on board at a more attractive level like $42.46 (Monday’s closing price).
Analysts have been busy raising estimates and target prices on shares after the most recent earnings beat. The average target stand at $52.29 with the highest ranked analyst, Brett Feldman of Goldman Sachs, posting a street high $54 target.
Lastly, shares offer a solid dividend yield of 2% which is nicely above the 10 year Treasury rate. Given investor friendly management they consistently increased the dividend payment over the years…and that is likely to continue.
When you add it all up you have an attractive large cap with growth, value, income and momentum on its side. Plus this is a quality selection that is perfectly “wired” for the current volatile market environment.
StockNews.com is the home of the POWR Ratings system. Here are some quick links to get you to the most popular POWR Ratings features:
Full List of “A ”Rated Strong Buy Stocks– See all the top rated stocks.
About the POWR Ratings– Learn what’s build inside the POWR Ratings that helps find stocks ready to outperform.
Reitmeister Total Return portfolio. This is where Steve Reitmeister employs his 40 years of investment experience to hand select the best POWR Ratings stocks.
CMCSA shares were unchanged in after-hours trading Monday. Year-to-date, CMCSA has gained 25.97%, versus a 16.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|CMCSA||Get Rating||Get Rating||Get Rating|
|ATUS||Get Rating||Get Rating||Get Rating|
|CABO||Get Rating||Get Rating||Get Rating|