Going Long On Comcast

| About: Comcast Corporation (CMCSA)

Comcast (CMCSA) currently stands as the market leader in the cable and home internet space. The company's stock price has increased by 31.9 percent in the past year, which strongly outperforms its competitor Time Warner Cable (TWC), whose shares increased by 7 percent. This surge stems from stronger than expected performance coupled with a quarterly dividend increase from 11 cents per share to 16 cents per share. In this article, I explain why there is still time to buy Comcast shares and generate a nice return.

Despite already being a market leader, Comcast is expected to have earnings per share growth of 20.3 percent in 2012 and 15.8 percent in 2013. In addition, Comcast has a strong line of products that align well with each other. If internet based television takes over, Comcast is still in a good strategic position as it bundles its cable, internet and phone services. This means that customers will be less likely to switch to only having an internet television service, similar to how many cable subscribers still have home phone service despite the takeover of the cellular phone industry.

In addition, Comcast is vertically integrated with a majority stake in NBC Universal and its ownership of thePlatform. The acquisition of NBC Universal, which closed in January of 2011, gives the company a unique position in the market as it controls such a large portion of critical television distribution. Competitors like Time Warner also hold cable networks, but on a much smaller scale. thePlatform, acquired in 2006, is an Internet media publishing company that provides media to NBC Universal channels' web sites along with media access for Hulu and XfinityTV. This further protects Comcast from becoming an obsolete company if internet television takes over.

Comcast's next earnings date is August 1st, 2012. The company is expected to report earnings per share of 48 cents, which is a 14.3 percent increase year over year. Right now, I put a Buy recommendation on Comcast shares and give the stock a one year price target of $40, 25.67 percent higher than its price at the close of July 16th. I expect Comcast to beat earnings, but the stock price swing after the earnings announcement should be no more than 3 percent in either direction. I believe the company's bull run will continue for the next one to two years and Comcast will outperform its competitors.

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I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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