Living in Miami, I have had the pleasure of being bombarded with campaign messages from Romney and Gingrich over the last few weeks. This gave me an idea on how to profit from what is going to be one of the nastiest and longest presidential and congressional campaigns in history. Simply put, media companies selling billions of dollars of ads during this election cycle should be huge winners in this never-ending campaign. There are two I like here, especially on any pullbacks as they both have had nice run ups.
Belo Corp. (BLC) - "Belo Corp. operates as a television company. The company owns 20 television stations, including ABC, CBS, NBC, FOX, CW, and MyNetwork TV affiliates, as well as their associated Web sites in 15 markets across the United States". (Business Description from Yahoo Finance)
4 reasons Belo has value at under $8 a share:
- The stock sells for less than 8 times operating cash flow and yields 2.6%.
- Earnings estimates for FY2011 and FY2012 have been moving up in the last three months.
- The stock is showing increasing technical strength and just crossed its 200 day moving average (See Chart).
- The stock has a forward PE of just over 8 which is a 25% discount to its five year average.
Sinclair Broadcast Group (SBGI) - "Sinclair Broadcast Group, Inc., a television broadcasting company, owns or provides certain programming, operating, or sales services to television stations in the United States. The company broadcasts free over-the-air programming, such as network provided programs, news produced locally, local sporting events, programming from program service arrangements, and syndicated entertainment programs". (Business Description from Yahoo Finance)
4 reasons Sinclair could move up from under $13 a share:
- The stock sells at 6 times operating cash flow and has a 3.7% dividend yield.
- Earnings estimates have gone up for FY2011 and FY2012 have increased over the last three months.
- The company has grown EPS at an average clip of 18% a year over the last five years and the stock is selling at the bottom of its five year valuation range based on P/CF.
- The stock is showing good technical strength and is over its 200 day moving average (See Chart).