Direct TV: May Be A Buy

If you want your HDTV, your best choice is DirecTV (DTV). With Cable providers like Comcast (CMCSA), Time Warner Cable (TWC) and Verizon (VZ) all offering about 20-30 HD channels, they have a long way to go to reach the 55 current channels and 100 total channels DirecTV plans on offering by year end.

Rural America is most affected by this. Currently cable operators do not deliver HDTV to this part of the population which is roughly 20% of the total. Currently the only option they have is DirecTV and they are choosing it in droves.

NFL fans already are switching en mass to DirecTV and its "Sunday Ticket" service that offer viewers all that day's NFL games. The company almost scored another coup when it nearly accomplished the same thing with Major League Baseball this year. While it did not get the exclusive package for the 2007 season, do not rule it out next year. Sports fans of all ilk can get their favorites on DirecTV's services and the company is luring international viewers with it foreign language stations.

DirecTV has dramatically dropped the price of its Sat-Go portable device, reducing it by $500 to $999, the Web site Gizmodo.com reported recently. The product, introduced in May, is the first-ever portable satellite TV unit. In the shape of a briefcase, the device allows DirecTV users to take their service on the road with them, and is pitched to both business travelers and sports tailgaters.

Customer service is a strength of the company currently, after a rough go in the late 90's and the turn of the century. They have more professional installers and wait (on hold) times fixing issues are seldom more than a few minutes and are virtually always solved on that call.

DirectTV's stock, after languishing from 2004 and 2005 was up 71% last year and almost 10% in 2007. In February they announced a $1 billion share repurchase which will total about 3% of all shares, modest. Shares currently trade at 15 times 2008 earnings projections and 21 times current years'.

DirecTV's real profit center may be their latest deal to sell internet access and VOIP over existing power lines. DIRECTV customers will be able to access the Internet by plugging a BPL modem into virtually any outlet in their home. This easy-to-use symmetrical service can send data faster than the typical cable modem service in use today. Initially only available in the Dallas area, look for this to take off.

Are shares a buy? DirectTV is in a category of one here even though they operate against cable operators. The breadth of services they can offer and the market they can reach (the whole thing) are unparalleled. Are they a value? In October of last year at $18 a share they were, but at today's $26 they are fairly valued. But, if the price should dip to around $20 again, I think you have a great buying opportunity.

Full disclosure: I have DirecTV (DTV) but do not own the stock.