As many of you already know, it’s tough to find inexpensive stocks with great upside potential when the markets are overvalued. There are no hidden gems overlooked by Wall Street. All of the so-called under-the-radar stocks have been picked over.
If you want to find solid stocks that perform well in an uncertain environment, you need to look for areas that are outperforming the broader markets. Case in point, the Dow Jones U.S. Media Index is up a solid 7.5% in 2015. The broader Dow Jones Industrial Average has gained just one percent; the S&P 500 has been trading in a tight range for months and is up just two percent year-to-date.
Below are three media stocks to watch in the second half of 2015. None of these media stocks are tiny stocks. And there’s a reason for that. With the Federal Reserve expected to lift interest rates later this year, the era of cheap money (and the fuel for the Bull Market) could be coming to an end.
High volatility momentum stocks that thrived under the ultra-low interest rate environment may not shine as brightly going forward. Companies that will continue to perform well in an environment of rising interest rates are going to be more established media stocks.
Also Read: Top Penny Stocks to Watch in 2015
Top Media Stocks to Watch in the Second Half of 2015
The Walt Disney Company (NYSE/DIS)
There’s more to Disney than a mouse. The Walt Disney Company (NYSE/DIS) is the world’s largest media company with a diversified operating base that includes movies, television, publishing, and theme parks. (Source: thewaltdisneycompany.com, July 15, 2015.)
As a media giant, Walt Disney Studios makes films through Disney Animation and Pixar. It also owns Marvel Entertainment, Lucasfilm, and Touchstone Pictures. The Disney Music Group includes Walt Disney Records and Hollywood Records as well as Disney Music Publishing. As the world’s largest licensor, Disney Consumer Products is home to the largest publisher of children’s books and 350 Disney Stores (350 locations worldwide).
The company’s share price is up 25.5% since the beginning of the year and provides an annual dividend of 1.12% or $1.32 per share.
In May, Disney announced that second-quarter earnings increased 10% year-over-year to $2.1 billion. Diluted earnings per share increased 14% to $1.23. Year-to-date earnings were up 14% at $4.2 billion. Earnings per share climbed 18% to $2.50 from $2.11 in the prior-year period. (Source: thewaltdisneycompany.com, July 15, 2015.)
Looking ahead, Disney will be releasing Star Wars: Episode VII – The Force Awakens, arguably the most anticipated movie ever, in December.
Also Read: Top 5 Micro-Cap Stocks to Watch in 2015
Time Warner Inc. (NYSE/TWX)
Time Warner Inc. (NYSE/TWX) is one of the world’s largest media conglomerates behind Walt Disney and News Corporation. It operates through three segments: Turner Broadcasting, Home Box Office, and Warner Bros. (Source: timewarner.com, July 15, 2015.)
Through Turner Broadcasting, the company runs a portfolio of popular cable TV networks including CNN, TBS, and TNT. Home Box Office has approximately 122 million HBO and Cinemax premium pay and basic cable subscribers. Popular HBO shows include Game of Thrones, True Detective, Girls, Veep, Real Time with Bill Maher, and Last Week Tonight with John Oliver.
Warner Bros. Entertainment includes films studios (Warner Bros. Pictures, New Line Cinema), TV production units (Warner Bros. Television Group), and comic book publisher DC Entertainment.
The company’s share price is up 6.2% year-to-date and provides an annual dividend of 1.56% or $1.40 per share.
Netflix, Inc. (NASDAQ/NFLX)
It started with DVDs and red mailing envelops. Today, Netflix, Inc. (NASDAQ/NFLX) is the world’s leading Internet television network with over 62 million members in over 50 countries. (Source: netlfix.com, July 15, 2015.)
Members can listen to as much music and watch as many TV shows, movies, documentaries, and feature films as they want; anytime, anywhere, on nearly any Internet-connected screen. Members can play, pause, and resume watching, all without commercials or commitments.
Netflix also produces a number of exclusive programs and original series including House of Cards and Orange is the New Black. Netflix is also home to previously cancelled shows from other channels, including Arrested Development, The Killing, Star Wars: The Clone Wars, and Trailer Park Boys.
Trading at around $97.50, the company’s share price is up 98% since the beginning of 2015.
On Tuesday, July 14th, Netflix went ahead with a previously announced 7-1 stock split; reducing the stock from above $700.00 to closer to $100.00 per share. Thus, making it more affordable for investors. (Source: Netflix.com, July 15, 2015.)
On July 15th, Netflix announced second-quarter revenue of $1.64 billion, a 22% increase over the $1.34 billion recorded in the same prior-year period. Second-quarter earnings came in at $23.6 million or $0.06 per share. This is equivalent to $0.42 per share prior to the split, which beats analyst consensus of $0.28 per share.
The company ended the quarter with more than 65 million subscribers, 2.5 million more than in the first quarter. In total, 42 million are in the U.S. and another 23 million are international. (Source: Netflix.com, July 15, 2015.)