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4 Media Stocks That More Than Doubled the S&P 500 in 2019

Zacks Equity Research

Media companies have witnessed a mixed year so far. Although lack of political ad spending hurt the top line, increased cord cutting and emergence of video streaming aided growth.

Moreover, media companies are gaining from rapid evolution of alternative distribution channels for broadcast and cable programming.

Growing preference for digital and subscription services over linear pay television and rental or outright purchase has compelled media companies to alter their business models.

Notably, traditional TV viewership continued to decline due to increased cord cutting and the emergence of video streaming. Per eMarketer, 56.1 million U.S. households will be cord-cutters or cord-nevers by 2023.

The growing demand for virtual multichannel video programming distributor (vMVPD) services or “skinny bundles” has also been a key catalyst. These bundles help broadcasters keep pace with new consumption patterns and attract customers.

Additionally, growing demand for high-speed Internet has benefited the top line of industry participants. Greater Internet speed is driving demand for high-quality video and the trend of binge viewing.  

Further, big studios like Disney DIS and Comcast CMCSA, which are coming up with their own streaming platforms, have preferred to keep their own content in-house.

This has prompted video streaming companies like Netflix NFLX to spend more on developing original and quality content to counter competition and acquire more subscribers. Notably, the company is anticipated to spend an estimated $15 billion on developing original content this year.

Our Picks

Here we pick four media stocks that have returned more than double the S&P 500’s rally of 27.2% year-to-date, in 2019. Moreover, these stocks either carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Phoenix, AZ-based Cable One CABO is a leading broadband communications provider, serving residential and business customers through its Sparklight and Clearwave brands. The company sports a Zacks Rank #1 and has returned 85.6% year to date.

Cable One is benefiting from growth of its Residential Data and Business services revenues. Moreover, revenues from the operations of recently acquired Clearwave Communications have also aided top-line growth.

Notably, the Zacks Consensus Estimate for its 2020 earnings has increased 11.7% to $41.22 over the past 60 days.

Cable One, Inc. Price and Consensus

Cable One, Inc. Price and Consensus

Cable One, Inc. price-consensus-chart | Cable One, Inc. Quote

 

Stamford, CT based Charter Communications CHTR is a leading broadband communications company and the second largest cable operator in the United States. The company has a Zacks Rank #2 and has returned 67.1% year to date.

Charter is benefiting from growth in Internet, mobile, commercial and video revenues. The company’s spectrum mobile products are gaining traction and its subscriber base is increasing rapidly. The launch of spectrum mobile services to small and medium business customers is a key catalyst. Improving free cash flow is also a growth driver.

Notably, the Zacks Consensus Estimate for its 2020 earnings has increased 10.4% to $13.63 over the past 60 days.

Charter Communications, Inc. Price and Consensus

Charter Communications, Inc. Price and Consensus

Charter Communications, Inc. price-consensus-chart | Charter Communications, Inc. Quote

 

Another Zacks Rank #2 company, Atlanta, GA based Cumulus Media CMLS is a leading audio-first media and entertainment company delivering premium television content. The company has returned 57.4% year to date.

Cumulus is benefiting from the growth of its digital business as well as the national spot and network broadcast revenue channels. C-Suite, the company’s local digital marketing services platform is gaining traction and its client base is increasing rapidly. Moreover, the company’s podcast content in news talk and sports areas has also been a key catalyst.

The Zacks Consensus Estimate for its 2020 earnings has decreased 13% to $2.72 over the past 60 days.

Cumulus Media, Inc. Price and Consensus

Cumulus Media, Inc. Price and Consensus

Cumulus Media, Inc. price-consensus-chart | Cumulus Media, Inc. Quote

 

McLean, VA based Tegna Inc. TGNA is a media company offering high-quality television programming and digital content. The company carries a Zacks Rank #2 and has returned 55.8% year to date.

Tegna is benefiting from growth in services, banking and media ad categories. Additionally, a stable paying subscriber base and higher rates are driving subscription revenues.

Moreover, the company’s continued acquisitions of local TV stations are likely to aid top-line growth and improve cash flow visibility,

Notably, the Zacks Consensus Estimate for its 2020 earnings has increased 22.7% to $2.16 over the past 60 days.

TEGNA Inc. Price and Consensus

TEGNA Inc. Price and Consensus

TEGNA Inc. price-consensus-chart | TEGNA Inc. Quote

 

Zacks Top 10 Stocks for 2020

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2020?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>


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The Walt Disney Company (DIS) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
Cumulus Media, Inc. (CMLS) : Free Stock Analysis Report
 
Comcast Corporation (CMCSA) : Free Stock Analysis Report
 
Cable One, Inc. (CABO) : Free Stock Analysis Report
 
Charter Communications, Inc. (CHTR) : Free Stock Analysis Report
 
TEGNA Inc. (TGNA) : Free Stock Analysis Report
 
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