As 2017 comes to an end, stock market investors have been as giddy as they can be. On Nov. 30, the Dow Jones Industrial Average passed 24,000 for the first time. One week later, the November jobs report showed a gain of 228,000 jobs in November. The most recent quarterly economic growth report also showed that the U.S. economy is very strong.
The future of the American economy also appears to be very bullish. On Nov. 16 and Dec. 2 respectively, the U.S. House of Representatives and U.S. Senate passed bills that would cut the corporate tax rate to 20 percent from 35 percent and also reduce tax rates for millions of individuals. The two bills need to be reconciled, so they are identical when they are voted on by both chambers of Congress again, but the GOP leadership in the House and Senate as well as President Donald Trump have said they are eager for a huge tax cut bill to be law by Christmas.
Many investment analysts have looked at the recent economic news and governmental actions, including Trump Administration decisions on cutting regulations on businesses, and forecast that the stock market will also be strong in 2018.
Many industries should do very well in 2018. Unfortunately, the television industry isn’t one of them.
For this report, Wealth Authority examined the short and long-term prospects of companies in the television industry. We found that experts working for publications like The Motley Fool and InvestorPlace have found companies in the TV industry that they think will be excellent investments because their products are well-positioned for the future of television. At the same time, we found that Zacks Equity Research and TheStreet, Inc. don’t rate many of these same companies as good stock buys for the near future.
Zacks rates only three of the 24 companies listed in its Broadcast Radio And Television category as buys and the industry itself ranks 217th out of the 265 industries it rates. Zacks has five categories of recommendations — strong buys, buys, holds, sells, and strong sells. In its Cable Television category, which ranks 77th out of 265 industries, Zacks rates one of the 11 companies listed as a buy. In its Film And Television Production And Distribution category, which ranks 35th, Zacks rates three of the seven companies as a buy.
Because many companies that plan to or could offer television services are listed in different industries such as Internet Services, Wealth Authority scrutinized Zacks ratings in 10 industries. Altogether, only 18 of 142 companies in these 10 industries are listed as buys and only five of them are strong buys.
Zacks rates one company in the Broadcast Radio And Television category a strong buy — Cumulus Media. The only Cable Television industry company in the strong buy category is Cable One.
The other three strong buys in other TV-related industries are EchoStar, Houston Wire & Cable Company, and Limelight Networks.
Zacks’ other buy recommendations in the Broadcast Radio And Television, Cable Television, and Film And Television Production And Distribution industries are British Sky Broadcasting Group, NTN Buzztime, IMAX, News Corporation, and World Wrestling Entertainment.
The other eight buys in other TV-related industries are Shutterstock, Pearson PLC, Liberty Media, Autohome, Baida Inc., Leaf Group, Marchex, and Tencent. It’s very possible that at least some of these eight companies might have no plans to offer television services, but they’re listed in the same industry categories as companies that are or are planning to offer television services.
Although the number of buy recommendations is low, smart investors should be looking at companies that are excellent long-term investments. InvestorPlace lists seven “Stocks to Buy for the Future of TV” and details why these companies are in an excellent position to profit from the changing landscape of television. The companies are Netflix, Amazon.com, Alphabet Inc. (the parent company of Google), Apple Inc., AT&T, Facebook, and Alibaba Group.
Zacks ranks the first six companies as holds while recommending that investors buy stock in Alibaba, which it lists in the Internet commerce industry, an industry that Wealth Authority looked at but did not include in its above lists of TV-related industries because most of the companies listed had nothing to do with television. Alibaba, Alphabet/Google, and Facebook were all on TheStreet’s list of Internet stocks with an A minus or above grade, but AT&T was ranked a C plus.
The Motley Fool also ranks Netflix, Facebook, and Alphabet/Google as TV industry-related stocks to buy. Facebook and Alphabet/Google are listed in this article about companies that will benefit from the fact that millennials are watching much less television than previous generations. Netflix is listed along with Disney and Scripps Networks as The Motley Fool’s “3 Top Movies and Television Stocks to Buy in 2017.”
The Motley Fool also recommended buying stock in Comcast, Disney, Time Warner, Twenty-First Century Fox, and Viacom in “The 5 Best Dividend Stocks in Movies and Television.” All of these stocks were rated as “holds” by Zacks. Disney, Time Warner, and Twenty-First were rated as Bs on TheStreet’s 10 best media stocks list, which doesn’t include Comcast and Viacom.
The difference in recommendations between investment analysts who are giving advice on what to do now and investment analysts who are trying to forecast how television industry companies will fare in the future proves one thing — patience is a virtue in the world of stocks. You should, of course, study on your own any company you are considering investing in, but you should also consider how the future of television will affect stock prices.
Regards,
Ethan Warrick
Editor
Wealth Authority
