“I’ve never been a big fan of the cable TV companies,” notes Jack Adamo who admits that his latest buy recommendation for Comcast (NASDAQ: CMCSA) might indeed sound like a sell recommendation.
But, in his Jack Adamo’s Insiders Plus, he concludes, “This is not a company I’m in love with, but the stock is just too cheap to ignore.” Here’s his rationale for buying.
“For decades the story has been that cable companies will eventually be able to scale back on their enormous capital outlays for infrastructure, and then sit back and harvest the free cash flow.”
“But so far that day has always remained in the future, due to periodic system upgrades, and increased competition from satellite TV and phone companies. Even Berkshire-Hathaway’s stake in Comcast did not convince me of its merits, and, in fact, capital expenditures at the these companies remains high.
“The outlook now is only marginally better. Comcast has added many new phone, internet and digital TV subscribers in the last few years, and continues to do so, albeit at a slower pace. Digital subscribers spend more, and have access to a growing number of new features that have high profit margins. “
Continue reading Comcast (CMCSA): ‘Too cheap to ignore’
Permalink | Email this | Comments
Entries (RSS)