Stocks are putting up impressive numbers so far this year. The S&P 500 is up 15%, and the tech-heavy NASDAQ is up 17.9%, and patient investors are reaping the rewards. But as this past May has shown, the markets are still volatile, and it’s tempting to look for ‘safe play’ investment. According to five-star blogger Aaron Levitt (Track Record & Ratings), the right stocks to buy are “the kind of equities that could be immune to the various geopolitical and economic events that are plaguing the markets currently.” So let’s dive into the TipRanks database and look at three stocks that are primed to keep delivering in the second half…
Comcast Corporation (CMCSA)
You wouldn’t necessarily pick the cable company as a market outperformer. Comcast has managed just that, however, gaining 20% year-to-date. The secret lies in streaming – by its Hulu agreement with Disney (DIS), Comcast is staking out a position in the future of television.
The Hulu agreement gives Disney operating control of Hulu now – it already has a controlling stake in the company – while committing both parties to a minimum sale price for Comcast’s shares in 2024. The advantage for Comcast is two-fold: the company can focus on releasing its own streaming service next year, while continuing to enjoy the profits from Hulu. And should Disney work its usual magic and boost Hulu’s valuation, Comcast will sell its share based on the higher valuation.
The near-term forward advantages which Comcast has locked in through the Hulu agreement are only part of the story. Comcast has shown double-digit annual EPS growth 15 times in the last 17 years, and generated $14 billion in free cash over in the last 12 months. Its cable and internet businesses provide a solid foundation to support the content production and technical innovation that the company needs to bring in new customers. The company’s upbeat forward-going prospects are reflected in the EPS estimates over the next three years – continued double digit growth. Add to this company’s attractive valuation and modest-but-reliable dividend, and you’ll understand why the market’s top analysts are so bullish.
From Morgan Stanley, Benjamin Swinburne (Track Record & Ratings) looks at the details of the Hulu agreement. Acknowledging that Disney has the immediate advantage, he also points out the benefits for Comcast: “The new deal gives it downside protection and content flexibility as it builds out its own streaming plans.” At the end of May, five-star analyst Mike McCormack (Track Record & Ratings), of Guggenheim, upgraded his rating on CMCSA and summed up the company’s position in the simple statement that “[Comcast] is well positioned within a rapidly changing landscape.” McCormack set a price target for the stock at $52, indicating his confidence in a 25% upside.
Comcast’s analyst consensus, based on all of its reviews over the last three months, is a ‘Moderate Buy.’ This consensus includes 7 buys and 3 holds. The stock is selling for $41, and the average price target of $48 suggests an upside potential of 17%…
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