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DirecTV and DISH Network Still Racing Higher

by
July 14, 2011 8:03 am
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In the wake of news of Netflix’s (NASDAQ: NFLX) price increase, satellite TV providers DirecTV (NASDAQ: DTV) and DISH Network (NASDAQ: DISH) reached new 52-week highs of $53.40 and $32.56 per share, respectively, in Wednesday’s trading session.

DirecTV has an active share buyback program, and Brean Murray Carret recently initiated the stock with a Buy rating, due in part to DirecTV’s expansion into Latin America. The company operates the largest direct broadcast satellite service in the U.S., serving 18 million U.S. customers and more than 6 million subscribers in Latin America. DirecTV has a market cap of $40.6 billion.

The return on equity is 172.2% and the long-term EPS growth forecast is 22.3%. It has a PEG ratio of 0.7, and the P/E ratio is less than the industry average. The stock has grown more than 32% since the beginning of the year, outperforming competitors Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC), as well as the broader markets.

DISH Network is rumored to be interested in NCR’s (NYSE: NCR) entertainment business, which includes DVD-rental kiosks under the Blockbuster name. Englewood, Colorado-based DISH Network has a $6.5 billion market cap and is the nation’s second largest provider of direct broadcast satellite TV service, serving about 14 million subscribers.

The company’s return on equity is 371.5%. Its P/E ratio of 10.9 less than the industry average and that of rival DirectTV. Short interest has fallen from last fall to 1.8% of the float. The share price has increased more than 60% over the past year. In that time, the stock has outperformed DirecTV and the cable television industry average, as well as the broader markets.

Action Items:

Bullish:Traders looking for exchange traded funds that invest in DISH and DirecTV might want to consider the following trades:

  • iShares Russell 1000 Growth Index Fund (NYSE: IWF): +6.8% year to date
  • Vanguard Total Stock Market Index Fund (NYSE: VTI): +5.4% year to date
  • iShares Russell 1000 Index Fund (NYSE: IWB): +5.3% year to date

Bearish:Traders looking for a contrarian angle may want to consider these alternate positions:

  • ProShares UltraShort Russell1000 Growth (NYSE: SFK)
  • ProShares UltraShort Consumer Services (NYSE: SCC)

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

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