“DIRECTV’s (DTV) earnings have been in a strong uptrend in recent years, and Value Line estimates that earnings per share in 2015-2017 could double the 2012 level. This growth will be fuelled in part by substantial share buybacks. The stock sells for a discount to the market multiple, and beta is only 0.9.
“The stock has solid price growth persistence of ‘85,’ and acceptable financial strength of B+. We expect DIRECTV to continue to peel off subscribers from cable, since satellite is overall a little cheaper than cable, and is the only choice in some rural areas. (Its satellite competitor, Dish network, is not nearly as attractively priced.) DIRECTV has a lot of room to expand in Latin America, too.
“The stock has dropped to 50, in part because the latest quarter, even though a sharp improvement from last year, showed a sequential decline in subscribers. This is likely to be only a hiccup, and the stock’s three to five year appreciation potential of 105-160 is enticing. We will buy 300 shares of DTV at the market.”
Daniel A. Seiver, The PAD System Report, November 30, 2012
