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Even as Sirius XM (SIRI) flirts with bankruptcy and rival DISH Network (DISH) sheds subscribers, Barron's says market-leading satellite-TV provider DirecTV Group (DTV) is "flashing a buy signal."

The company is "defying gravity," as one analyst puts it -- gaining more subscribers and growing earnings. The stock could pop more than 40%, to about $30.

Here's why Barron's is so bullish:


  1. DTV's $300/season premier sports package, with its winning NFL Sunday Ticket, is a must-have subscription for serious sports fans. DTV leads the industry with 130+ high-definition channels.
  2. DTV added 301,000 new subscribers during a Q4 in which other companies - and the economy - crumbled. Churn fell to a record low 1.42%.
  3. DTV replaced DISH in a partnership with AT&T (T), which lessens the risk of it not having a broadband offering, and makes it more likely to keep the Ticket after its deal with the NFL expires in 2010.
  4. Shares trade not far from 2005 levels, even though DTV increased its market share to 18% from 16%. CEO Chase Carey says shares are "woefully undervalued."

Loomis Sayles analyst Paul Wright thinks DTV will beat consensus EPS estimates in 2009, driving shares ($21) toward $30. "They are executing tremendously." Add to that the possibility of an overture by a telco such as AT&T or Liberty Media Interactive (LINTA) which already owns 53.6%.

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  • Though the deadline for the switch to digital TV was delayed by the Obama administration, once it's law it will be a boon for DTV, Investment U says.
  • Market Folly notes that $4B hedge fund Maverick Capital recently boosted its stake in DTV by 96.2%.
Source: DirecTV Is Flashing a Buy Signal - Barron's