Comcast (NASDAQ:CMCSA) may seem like a blurry pick when it comes to the stock market. On the one hand, the company should be a clear winner from the stay-at-home and work-from-home themes. On the other hand, Comcast stock has some theme park exposure and negative growth rates forecasts for this year.
Source: Todd A. Merport / Shutterstock.com
So what makes Comcast stock so attractive? For starters, let’s look at streaming.
The Peacock Takes Flight
When I first heard that Comcast was launching its own streaming service, I thought, “Oh man, not another one!”
How many more services can consumers take? At this rate, I’m not sure that it’s even cheaper to switch from cable anymore. Comcast’s Peacock joins a loaded lineup, including Netflix (NASDAQ:NFLX), Disney (NYSE:DIS), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and AT&T’s (NYSE:T) HBO.
That said, Comcast has the rights to some strong content. The company has late-night shows available early each weeknight, including The Tonight Show Starring Jimmy Fallon and Late Night with Seth Meyers. It also includes shows like Saturday Night Live, Parks and Recreation, Keeping Up With the Kardashians and Law & Order, among others.
It will also include countless movies, news programming from the likes of Sky News, NBC, CNBC and its TODAY programming, as well as sports programming. The latter will include certain Premier League games, golf tournaments and the 2021 Summer Olympics.
However, everyone knows Netflix, HBO and Disney — they are synonymous with TV and entertainment. Peacock doesn’t have that kind of recognition, so it may have trouble gaining traction after launching to the public on July 15. That may be the case, but Comcast has a deep pool of customers already. That’s thanks to its internet and cable subscribers.
Still, in a world that’s rapidly shifting toward streaming, Comcast’s Peacock should eventually gain traction. That’s due to two reasons: Price and content.
Put simply, Peacock really does have some great content up its sleeve and its tiered pricing is right. It ranges from free at the low end, to $4.99 per month in the middle and $9.99 per month for its top offering.
As Americans get back into the workforce and start to enjoy normal luxuries like dining out, some investors wonder about the stay-at-home theme. Don’t worry friends, this theme is alive and well.
The move from office to home office increased demand for stay-at-home products. That includes cable and internet, particularly the latter. While it’s hard to imagine a bevy of new customers looking for internet, it at the very least kept current customers paying their bills.
That’s good for Comcast and its financials. Over the last few years, we’ve seen steady growth in its free cash flow. That metric has climbed from $8.4 billion in 2016 to more than $13 billion in fiscal 2019.
Strong free cash flow should also help keep the dividend moving. In January, management gave a 9.5% boost to the quarterly payout, which now yields 2.25%. Given the paltry payout of the 10-year Treasury bond — 0.62% — this is an attractive slice of income for investors.
Had Peacock launched six months ago, we likely would have seen a boon in demand. However, I expect some of these novel coronavirus inspired shifts to be permanent fixtures in society. Streaming is one of those shifts, and combined with some of Comcast’s other offerings, this company is set to benefit from the stay-at-home theme — even when it’s safe to go back to normalcy.
Comcast Stock Has Good Charts
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Source: Chart courtesy of StockCharts.com
Believe it or not, some stocks still have poor charts despite a near-50% rally in the S&P 500 over the past few months. Fortunately, Comcast stock is not among those names.
Shares hammered out a nice low around $32 in late March and early April. Since then, Comcast has put in a series of higher lows, highlighted on the chart via uptrend support (blue line).
With this week’s rally, Comcast stock is looking to reclaim the 200-day moving average, while maintaining over its 20-day and 50-day moving averages. It’s also contending with its 61.8% retracement.
Should the stock gain momentum over $41, it puts the June highs in play near $43, as well as the 78.6% retracement near $44. Above that puts the $46 to $47 area back in play, which has been resistance for several quarters now.
On the downside, a break of $38 would be concerning. It puts Comcast stock below all of its major moving averages, uptrend support and the 50% retracement.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. As of this writing, Matt did not hold a position in any of the aforementioned securities.
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