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 News Corporation (NASDAQ:NWSA) 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.
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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).
An array of news articles and video clips with the company logo.
News Corporation (NASDAQ:NWSA)
Average Price Target Upside: 34.27%
Number of Hedge Fund Holders: 41
News Corporation (NASDAQ:NWSA) is a global media and information services company that provides a range of content and products through well-known brands like The Wall Street Journal, Barron’s, The Australian, and HarperCollins Publishers. The company operates in multiple sectors, including digital real estate, subscription video services, news, book publishing, and sports. It is one of the best communication stocks to buy according to analysts.
It distributes its content across multiple platforms, including websites, mobile apps, smart TVs, social media, and traditional media such as print, TV, and radio. The company focuses on high-quality content and innovation, using digital tools to offer personalized services and monetize its content through subscriptions, advertising, and licensing.
The company released its fiscal fourth quarter and FY 2024 earnings in August. News Corporation (NASDAQ:NWSA) reported that despite challenges from high interest rates, fiscal 2024 was its second-best year, with an 8% rise in profitability to $1.54 billion. At the earnings call, CEO Robert Thomson noted the company’s growth in areas like book publishing, Digital Real Estate Services, and Dow Jones. A key focus was the company’s partnership with OpenAI, which aims to shape the future of journalism through AI and emotional intelligence.
The company is still reviewing its strategic options including potential moves involving Foxtel, which has seen significant subscriber growth. Other segments also performed well, such as Dow Jones, which saw strong B2B growth, and HarperCollins, which had a 250% increase in sector EBITDA.
News Corporation (NASDAQ:NWSA) expects growth across its segments in fiscal 2025, with a continued focus on digital real estate and subscription services. It plans to improve revenue from complementary businesses and digital offerings.
Overall NWSA ranks 3rd on our list of the best communication stocks to buy according to analysts. While we acknowledge the potential of NWSA 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 NWSA 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.