The last "discretionary" product consumers are likely to forgo, even in a severe recession, is their television service.




is as close to a "consumer staple" provider as any "consumer discretionary" firm might hope to be.

Analysts expect DirecTV's earnings per share to increase 15.5% to $1.35 for the fiscal year ended Dec. 31 from $1.20 a year earlier. Bleak prospects for the overall economy haven't discouraged analysts from forecasting a 28.1% gain for the current year, to $1.78 per share. EPS has advanced steadily in recent years, from 1 cent in 2004 to 20 cents in '05 to $1.06 in '06.

DTV traded as high as $29.10 in June, then pulled back to as low as $11.25 during the crash before recovering to the low- to mid-$20s in recent months. The stock is currently priced at about 12 times this year's projected earnings.

As can be seen in the accompanying table, Ratings' quantitative evaluation model has rewarded DTV with an overall grade of "B," which equates with a "buy" recommendation.

Incorporated in 1977, DirecTV owns nine geosynchronous satellites (and leases an additional one) to transmit digital television to the U.S. and Latin America. In recent years, it has been aggressively acquiring distribution firms in the major areas it serves.

Domestically, DTV serves more than 140 markets covering 94% of households. Its high-definition TV coverage reaches 68 markets representing 72% of U.S. households. In Latin America, DirecTV reaches 5 million customers.

DTV has been adding clients in recent quarters while the subscriber base of its major domestic competitor,

Dish Network

(DISH) - Get Report

, has been stagnant. Ratings' grade of "C" for DISH equates with a "hold" recommendation.

With firms such as


(T) - Get Report



(VZ) - Get Report

eager to add television to their offerings of phone and broadband computer services, talk is rife of a DirecTV acquisition.

An interesting "backdoor" entry for an equity position in DTV is

Liberty Media (Entertainment)



, which holds 52% of the satellite TV firm in addition to other assets. Liberty Media is not graded by Ratings.

Richard Widows is a senior financial analyst for Ratings. Prior to joining, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.