Cable Stocks Emitting Strong Signals

Cable stocks are emitting a strong signal. Despite the recent pullback, the uptrend in the relative performance of U.S. cable stocks like Comcast Corp. (CMCSA), Direct TV Group Inc. (DTV), Scripps Networks Interactive Inc. (SNI) and Time Warner Cable Inc. (TWC) remains in tact, according to BCA Research.

The firm said in a research note:

While thriftier consumers are tightening purse strings and struggle to repair their impaired balance sheets, relative outlays on cable services remain robust.

Given this backdrop and the fact that cable pricing power has proven resilient (despite competition in the telecom space), BCA expects investors to continue bidding up cable stocks.

The firm recommends an overweight position in the sector along with a long cable and satellite/short telecom services pair trade within the S&P 500.