Stock Picks Review | Winter 2024 | #1
Quality Value Investing's communications services sector updates on DIS, CMCSA, VZ, GOOGL, and META
Summary:
In this first of eight sector posts, Quality Value Investing (QVI) reviews its communications services stock picks: Walt Disney, Comcast, Verizon Communications, Alphabet, and Meta Platforms.
The post includes updates to QVI’s checklist research and analysis of each company’s current wealth and the stock price’s present value.
Any changes in my view (buy, hold, sell) are reflected in the QVI Concentrated and Expanded Stock Picks Real-Time Performance Trackers.
When referencing this report, premium (paying) subscribers can access their Quality Value Investing (QVI) Glossary of Investing Terms and Metric Targets. Unless noted, all data presented is sourced from Seeking Alpha Premium as of the market close on January 4, 2024, and intended for illustration only.
In this series, Quality Value Investing (QVI) reviews QVI Real-Time Stock Picks by sector to update each holding’s performance, current wealth, and present value.
Today’s post analyzes the five QVI communications services sector holdings: The Walt Disney Company (DIS), Comcast Corporation (CMCSA), Verizon Communications, Inc. (VZ), Alphabet, Inc. (GOOGL), and Meta Platforms, Inc. (META).
Company Current Wealth
To uncover the current wealth of each company, QVI defines the value proposition, measures select returns on management, and assesses enterprise downside risks.
Value Proposition
QVI’s value proposition section defines the competitive advantages of each company’s products or services to its customers compared to the industry, including the stock’s historical performance vs. the sector and market.
Value Proposition Elevator Pitches
Disney is the reigning original content king in film, television, and themed resort entertainment.
Comcast is an empire spaning the entire media complex producing content at NBC Universal and then delivering programming and providing internet serices via Peacock, Sky, and Xfinity.
Verizon is a counterintuitive defensive play in the burgeoning fifth-generation mobile network or 5G and the disruptive Internet of Things or IoT.
Alphabet dominates search, data analytics, and maps with Google, mobile devices with Android, web browsing with Chrome, collaboration with Gmail and Drive, and video with YouTube, and is a rising star in the cloud and artificial intelligence.
Meta Platforms has as wide a moat as there is in social media, where its 3 billion users of Facebook, Instagram, Messenger, and WhatsApp fuel a captive advertising powerhouse.
Performance vs. Sector and Market
The chart below illustrates each holding’s performance against the Communications Services Select Sector SPDR® Fund ETF (NYSE: XLC) since XLC’s inception on June 18, 2018, and the SPDR® S&P 500 ETF Trust (NYSE: SPY) for the same period.
GOOGL is the only holding that has outperformed the communications services sector and the broader market since the inception of XLC in June 2018. META and CMCSA have outperformed the sector, while VZ and DIS have underperformed the sector and the market during the coverage timeframe.
As far as each holding’s performance since being added to the QVI Real-Time Stock Picks, META has topped the S&P 500 by +828 basis points (bps) since being added on 9/19/2023, GOOGL -406 bps since 2/23/2022, VZ -3,525 bps since 4/8/2021, CMCSA -5,140 since 1/10/2018, and DIS -7,241 since being added to QVI on 6/15/2009.
Overall, the QVI communications sector picks are lagging behind the benchmark. Although META is in positive bps territory, it is too early to assess market performance since its inception last fall.
Next, we’ll look at each company’s returns on management, enterprise downsize risks, each stock’s present value, share price downside risks, and the updated views exclusive to Quality Value Investing’s premium (paying) subscribers.
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