We recently compiled a list of the 8 Best Communication Stocks To Buy According to Analysts. In this article, we are going to take a look at where Rogers Communications Inc. (NYSE:RCI) stands against the other communication stocks.
The communication sector seems to be performing well through this year as the sector ETFs are slightly outperforming the broader market. While XLC and VOX are up over 25% year-to-date as of October 17, the S&P has gained slightly over 23%. Chris Grisanti, chief market strategist at MAI Capital Management also sees significant opportunities in the tech and communications sector despite him being a value investor.
READ ALSO 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In
He told CNBC on October 17 that the economy appears to be in very strong shape, with positive earnings reports from financial companies. Economic indicators are looking solid, and the upcoming election could have a positive effect regardless of the outcome. Moving forward, the strongest earnings are likely to come from technology and communication stocks, despite them typically being outside value-focused investments.
Adapting to Consumer Behavior in Media and Telecom
According to PwC’s Media and Telecommunications: US Deals 2024 Midyear Outlook, media and telecommunications deal activity remained subdued due to high interest rates and uncertain regulations, with deal volumes declining despite a slight rebound in values in 1H 2024. Consumer preferences are shifting towards short-form, user-generated content platforms like TikTok, where influencers play a significant role in attracting brand partnerships. Streaming platforms are evolving through bundling and partnerships to manage rising content costs while improving subscriber retention.
AI, especially generative AI, is increasingly influencing content creation and ad tech, which are making campaigns more efficient and optimizing ad spending. Private equity investors are showing renewed interest, especially in consumer-focused deals, although regulatory obstacles and privacy concerns continue to complicate the market. As companies navigate these challenges, maintaining a strong consumer value proposition is crucial to retaining subscribers and driving growth.
Our Methodology
For this article, we identified over 40 communications services stocks with a market cap above $10 billion through the Finviz stock screener. Next, we narrowed our list to 8 stocks most favored by analysts. We listed the stocks in ascending order of their average price target upside as of October 17. We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s Q2 database of 912 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician working on a mobile device, indicating the company’s wireless internet access capabilities.
Rogers Communications Inc. (NYSE:RCI)
Average Price Target Upside: 29.18%
Number of Hedge Fund Holders: 22
One of the best communication stocks, Rogers Communications Inc. (NYSE:RCI) is a Canadian telecommunications and media company with a wide-ranging presence in wireless communication, cable TV, and internet services. It operates one of Canada’s largest wireless networks and serves millions of customers nationwide. The company also holds significant stakes in television, radio, and sports, making it a major player in Canada’s media landscape.
As one of the leading wireless providers in Canada, it connects 11.7 million mobile subscribers across more than 2,200 communities through its expansive 5G network. The company also serves over 60% of Canadian households and offers reliable internet, innovative TV services like the Xfinity platform, and top-tier home security. It also delivers tailored connectivity solutions to more than 4 million businesses and supports both small and large enterprises.
On October 8, Rogers (NYSE:RCI) announced that starting January 1, 2025, it will exclusively host Warner Bros. Discovery’s suite of English-language U.S. lifestyle and factual channels in Canada. This move comes after Bell Media dropped its legal challenge to prevent Canadians from accessing Discovery channels.
As the exclusive distributor and advertising representative for Discovery brands in Canada, the company will launch channels like Discovery ID and Discovery, along with additional content from Cooking, OWN, MotorTrend, Animal Planet, and Discovery Science.
On September 18, Rogers (NYSE:RCI) announced it has agreed to purchase Bell’s 37.5% stake in Maple Leaf Sports & Entertainment (MLSE) for C$4.7 billion. The deal strengthens the company’s position in sports and entertainment, which are key components of its business strategy. Over the past decade, Rogers has invested C$14 billion in Canadian sports, and this purchase will further support its efforts to bring championships to the country.
The company’s financing plan ensures the deal won’t impact its debt levels, with private investors involved in the funding. The transaction will also secure long-term Canadian ownership of the MLSE teams. After the acquisition, Rogers (NYSE:RCI) will hold a controlling 75% stake in MLSE, expanding its sports portfolio, which includes ownership of the Toronto Blue Jays and Rogers Centre, as well as partnerships with other Canadian sports teams.
Overall RCI ranks 6th on our list of the best communication stocks to buy according to analysts. While we acknowledge the potential of RCI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RCI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.