Vincent Lorusso, Partner and Portfolio Manager at Clough Capital Partners, says Comcast Corporation (NASDAQ:CMCSA) is an example of a stock that should benefit from what he calls the digital disruption theme.
[Digital disruption] encompasses the ongoing evolution of the Internet infrastructure, the proliferation of smartphones and tablets, the rising propensity of media companies to stream content directly to consumers, the evolving advertising landscape and emerging retail trends.
Comcast is a company that has come under a little bit of scrutiny in the equity markets — we think partly associated with broader headlines around cord cutting and unbundling…
When we look closely at these evolving media consumption habits, we would agree consumers have begun to de-emphasize the traditional video bundles, but we think this shift is gradual in nature, and where consumers are able to reduce their dependence on a video bundle, they may simultaneously, even if unintentionally, increase their dependence on their Internet infrastructure — often from the very same provider.
Lorusso adds that having a robust Internet connection has become almost essential in many households, and while the shift to streaming media may diminish the utility of a traditional video bundle, it only adds to the utility of a vibrant Internet connection.
This means that precisely as the cable companies migrate customers away from a video bundle and into a high-speed data plan, companies like Comcast can actually grow gross profits. That high-speed-data customer is more dependent on the service, has fewer alternatives, and we think they bring greater pricing power to the Internet service provider.
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