By Peet Serfontein & Zimele Mbanjwa.
Comcast Corporation, (CMCSA), operates as a diversified media and technology company with a global footprint. The company is known for being a leading cable and telecommunications provider in the US, offering television, high-speed internet, and telephone services. Its media operations include NBC Universal's television and streaming business, encompassing national and regional cable networks, broadcast networks like NBC and Telemundo, owned local broadcast television stations, and the direct-to-consumer streaming service Peacock. Furthermore, Comcast operates in the international television network space, including the Sky Sports networks and other digital properties.
Over the last five years to FY23, group revenue has grown at a CAGR of 2.8% amid average annual growth in net wireless subscribers of 11.8%, and annual declines in net high speed internet users of 52.8%, and cable users of 4.6%.
Technically, the stock is in an accumulation phase making it a compelling investment opportunity (see the insert on the main chart as well as the annotation). During an accumulation phase, increased buying may be balanced by selling from investors who are still pessimistic about the market's prospects. However, the underlying buying pressure gradually absorbs the sell-off, setting the stage for the next phase of the market cycle, which is an uptrend or a bullish market.
The stock is testing its 200-day simple moving average of ~$43.50, making this a contrarian trade.
Fading downside price momentum, according to the MACD indicator, as well as a recent bullish divergence of the on-balance volume indicator, supports our bullish view.
Share Information
| Share Code | CMCSA |
|---|---|
| Industry | Media & Entertainment |
| Market Capital (USD) | 171.52 billion |
| One Year Total Return | 25.05% |
| Return Year-to-Date | -0.86% |
| Current Price (USD) | 43.19 |
| 52 Week High (USD) | 47.46 |
| 52 Week Low (USD) | 34.63 |
| Financial Year End | December |
| The stock price has performed well over the past 12 months, but has been flat year-to-date. Various technical indicators suggest a recovery going forward. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 3.98 | 4.25 | 4.61 | 5.16 |
| Growth (%) | 6.88 | 8.39 | 11.88 | |
| Dividend Per Share (USD) | 1.16 | 1.24 | 1.34 | 1.44 |
| Growth (%) | 6.90 | 7.98 | 7.77 | |
| Forward PE (times) | 10.15 | 9.37 | 8.37 | |
| Forward Dividend Yield (%) | 2.87 | 3.10 | 3.34 | |
| Expected earnings growth over the medium term looks moderate and steady, which is reasonable for a business of this size. | ||||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position | BRY - Buy (Continue to hold) |
CVX - Buy (Continue to hold) |
BMY - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 7.14 | 147.89 | 53.28 |
| Current | 7.45 | 151.89 | 54.40 |
| Movement | 4.3% | 2.7% | 2.1% |
| The formation of a falling wedge pattern remains attractive. The stock remains below its 200-day moving average and we maintain a counter-trend strategy. Upside price momentum is supportive. Our profit target is $8.50, with a trailing stop-loss at $6.95. Exit the trade by 5 June 2024. | The stock price is holding above key support, and this remains attractive. The stock remains below its 200-day moving average and we maintain a counter-trend strategy. Fading upside momentum is a concern. Our profit target is $167, with a trailing stop-loss of $145.20. Exit the position around 28 June 2024. | Price action two standard deviations below the linear regression channel remains of interest. The stock is trading just below its 200-day simple moving average, and we maintain a counter-trend strategy. Upside price momentum supports the trade strategy. Our profit target is $60.0, with a trailing stop-loss at $52.10. Exit the trade by 4 October 2024. |
| Share Name and position | VWO - Buy (Continue to hold) |
FSLR - Buy (Continue to hold) |
BDX - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 41.57 | 159.06 | 239.07 |
| Current | 42.23 | 159.38 | 237.82 |
| Movement | 1.6% | 0.2% | -0.5% |
|
The development of a symmetrical triangle pattern remains of interest. The ETF remains above its 200-day moving average. Upside price momentum is encouraging.
Our profit target is $48, with a trailing stop-loss of $41.20. Exit the position around 14 June 2024. |
A price near the lower end of the regression channel remains attractive. The stock is just below its 200-day moving average and we maintain a counter-trend strategy. Upside price momentum is supportive.
Our profit target is $190, with a trailing stop-loss of $143. Exit the position around 9 April 2025. |
The presence of a well- established price range remains attractive. The stock is trading below its 200-day moving average and we maintain a counter-trend strategy. Fading upside momentum is a concern.
Our profit target is $265, with a trailing stop-loss of $230. Exit the position around 24 April 2024. |
