IBD has long advised that investors focus on leading stocks in
top industry groups.
Time Warner Cable (
) certainly matches this description. Its IBD industry group,
Telecom Services-Cable/Satellite, ranked No. 17 out of 197 groups
as of Monday's edition.
The cable giant is one of the best-rated stocks in the group,
along withComcast (
Time Warner, which provides an annualized dividend yield of
about 2.5%, has a trait that you especially want to see in income
stocks: It sports a strong three-year EPS Stability Factor. Its
factor is 4, near the best-possible grade of 0.
You prefer a strong grade in this area because it gives you
some assurance that the company will keep earning a profit and
keep paying its dividend quarter after quarter, year after
Another positive for Time Warner is several quarters of
increasing ownership by U.S. mutual and hedge funds.
On the downside, Time Warner missed Wall Street's expectations
with its third-quarter earnings, reported Nov. 5. But some
analysts said they still like the stock.
Analysts at Credit Suisse said concerns over pension funding
and voice costs were overdone.
In a recent note, they praised Time Warner's growth
opportunity in broadband and commercials services, the margin
expansion potential following the Insight acquisition, declining
capital intensity and the company's "solid dividend and dividend
In terms of chart action, Time Warner has been sketching a new
base for about seven weeks. The pattern began when the stock sold
off following its Q3 report.
The possible buy point is at 100.60, and there's resistance
around the 100 level. So far, most of the base has taken shape
below the 10-week moving average, which isn't constructive.
Don't confuse Time Warner Cable with the TV, film and
publishing companyTime Warner (
). The two went their separate ways in 2009.
The quarterly dividend was raised from 40 cents to 48 cents a
share about a year ago, then to 56 cents starting in March.