The economic outlook is brightening, and with it, the broadcast sector is poised to benefit. The latest consumer confidence numbers came as a pleasant surprise to Wall Street, signaling that the economy is steadily, albeit slowly, improving. This newfound optimism sets the stage for a solid recovery expected to take hold in the second half of 2013 and extend into early 2014. This is perfect timing for broadcasting companies, as they stand to gain tremendously from increased advertising dollars.
As consumer confidence rises, advertisers are ramping up their spending, leading to rapidly improving fundamentals for broadcast companies. Adding to this, major events on the horizon, such as mid-term elections, the FIFA World Cup, and the Winter Olympics, are expected to fuel revenue growth. Three broadcasting stocks—Sinclair Broadcasting (SBGI), Belo Corp. (BLC), and Nexstar Broadcasting Group (NXST)—are showcasing strong ‘buy’ signals. Let’s dive into why these stocks are set to shine.
Editor's Note: Analysis and insight for this article were originally sourced from our friends at InvestorPlace
Sinclair Broadcasting (SBGI)
When it comes to aggressive expansion in the broadcast industry, Sinclair Broadcasting (SBGI) is leading the charge. The company has not waited for full economic recovery to take bold steps. Its recent acquisition of Fisher Communications, which adds 20 TV stations and three radio outlets in the Pacific Northwest, expands Sinclair’s portfolio to 65 television stations in 39 markets across the United States. This massive move significantly amplifies Sinclair’s reach and influence, positioning it as a media powerhouse.
The stock performance of SBGI has been nothing short of phenomenal, doubling in value year-to-date. This incredible run reflects robust market confidence in Sinclair’s aggressive strategies aimed at driving both top- and bottom-line growth. Sinclair’s continuous expansion and solid financial results have not gone unnoticed. Portfolio Grader has awarded SBGI an “A” grade, suggesting it’s a “strong buy.” This rating highlights the stock’s strong fundamentals and potential for substantial returns, making Sinclair Broadcasting a premier pick for investors eager to capitalize on the improving economic landscape.
Analyst Ratings and Forecasts:
| Metric | Value |
|---|---|
| Consensus Rating | Overweight (Buy) |
| Average Price Target | $34.50 |
| Potential Gain | 24.1% |
| Number of Ratings | 7 |
Summary of Analysts’ Outlook:
Analysts have a bullish outlook on SBGI, with a consensus “Overweight” rating. The average price target of $34.50 implies a potential gain of 24.1% from the current price. The company’s strong financial performance, including revenue growth and solid cash flow generation, are likely contributing to the positive sentiment.
Sources:
- TipRanks: SBGI Analyst Ratings
- Yahoo Finance: SBGI Analyst Estimates
- MarketWatch: SBGI Analyst Ratings
Belo Corp. (BLC)
Next up is Belo Corp. (BLC), a heavyweight in the broadcasting arena with a significant market reach. Belo owns 20 TV stations and websites across 15 markets, along with three local channels and two regional news networks. The company’s alignment with all major networks further amplifies its market clout, covering nearly 15% of the national TV market.
What sets Belo Corp. apart is its consistent ability to outperform Wall Street estimates. The company has surpassed expectations for four consecutive quarters, and analysts remain optimistic about its continued strong performance for the rest of the year. This consistent record of outperformance has led to a significant upgrade of its stock rating. Currently, Portfolio Grader rates BLC as a “strong buy,” signaling the company’s robust fundamentals and promising growth trajectory. For investors seeking a reliable performer with steady historical gains, Belo Corp. makes for a tantalizing investment option.
Analyst Ratings and Forecasts:
| Metric | Value |
|---|---|
| Consensus Rating | Overweight |
| Average Price Target | $144.50 |
| Potential Gain | 14.1% |
| Number of Ratings | 12 |
Summary of Analysts’ Outlook:
Analysts have a positive outlook on BLC, with a consensus rating of “Overweight.” The average price target of $144.50 suggests a potential gain of 14.1% from the current price. This indicates that analysts believe the stock has upside potential and is likely to increase in value over the next 12-18 months.
Sources:
- Yahoo Finance: BLC Analyst Ratings
- TipRanks: BLC Analyst Forecast
- MarketWatch: BLC Analyst Estimates
Nexstar Broadcasting Group (NXST)
Last but certainly not least is Nexstar Broadcasting Group (NXST), a name synonymous with strategic expansion and strong market presence. Nexstar owns or provides services to 72 stations in 18 markets across the United States, covering over 12% of the television broadcast audience. The company’s strategy to support a second station in over 60% of its markets significantly enhances its revenue-generating capabilities.
In late April, Nexstar announced the acquisition of an additional 19 stations, thereby extending its footprint into 10 new markets. These strategic acquisitions are expected to bolster Nexstar’s market position and revenue streams. Recently, Nexstar reported record results, further proving its strong performance throughout 2013. This financial robustness is reflected in its Portfolio Grader rating, which consistently classifies NXST as a “strong buy.” The stock’s consistent high performance and strategic acquisitions make it an attractive option for investors on the hunt for a proven performer with growth potential. Nexstar Broadcasting Group stands out as an excellent choice in the broadcast sector.
Analyst Ratings and Forecasts:
| Category | Rating/Value |
|---|---|
| Consensus Rating | Overweight |
| Average Price Target | $143.50 |
| Potential Gain | 24.1% |
| Number of Ratings | 7 |
Summary of Analysts’ Outlook:
Analysts have a positive outlook on NXST, with a consensus “Overweight” rating. The average price target of $143.50 suggests a potential gain of 24.1% from the current stock price. This optimism is likely driven by the company’s strong financial performance, growing revenue, and increasing viewership.
Sources:
- Yahoo Finance: NXST Analyst Estimates
- TipRanks: NXST Analyst Ratings
- MarketWatch: NXST Analyst Estimates
With consumer confidence on the rise and advertisers boosting spending, the broadcast sector is sizzling with opportunity. Sinclair Broadcasting, Belo Corp., and Nexstar Broadcasting Group are uniquely positioned to capitalize on these favorable conditions. Each of these companies boasts strong fundamentals, strategic expansions, and consistent performance, making them compelling ‘buy’ candidates for investors eager to ride the wave of economic recovery. Don’t miss out on what could be a lucrative chapter in the broadcasting industry’s growth story.
Louis Navellier’s Portfolio Grader has done an excellent job of identifying these strong buys, and the favorable economic conditions set the stage for robust returns for these stocks. As they say in broadcasting, stay tuned—exciting times are ahead.