Comcast (CMCSA) Offers Attractive Value, Growth in Cable, Satellite TV

November 19, 2012

Comcast Corporation (CMCSA) is a top pick as the cable and satellite TV sector stands out right now as an attractive value within the leisure and entertainment space, and U.S. large-cap media companies continue to remain broadly overweight, says Doug Mitchelson, Managing Director and Senior Equity Analyst at Deutsche Bank Securities Inc.

“We have been quite constructive on cable, where all the stocks have done well, but valuations are still quite attractive and the companies can carry a fair amount of debt leverage, allowing return of capital to also be quite favorable, driving pretty strong bottom-line growth with a fair degree of visibility given the lesser cyclicality that those businesses have,” he said.

Mitchelson says Comcast, which has been growing revenue and EBITDA in the 5% to 6% range, has been well above the average industry growth, partly due to the level of investment the company has made in the past five years, including during the recession, when others were trying to conserve capital and reduce operating expenses.

“In media, our top pick is News Corp. (NWS), where we see 11.5% fiscal 2013 operating income growth, buybacks that could total 6% to 7% of shares outstanding, and the split off late next spring of its publishing group into a separate publicly traded company, which could spark a re-evaluation of the company,” Mitchelson said.

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