CBS Is the King of Content and Worth Investment
Imagine if you could win most of your trades. The key is seeing where each market sector is heading, and then determining which companies are best positioned to dominate them.
That's particularly difficult in the fast-changing television industry, which has been losing viewers to online upstarts, including Netflix, Hulu, Amazon'sAmazon Prime, and other platforms undreamed of just a decade ago.
But venerable CBS (CBS) - Get Report , has proven nimble in navigating this new landscape. It's a likely growth stock winner in 2016. CBS has been able to offer a range of programming that engages large audiences. That includes sitcoms, sports and movies. More importantly, advertising revenues are robust. Not surprisingly, the company reported strong earnings earlier this month for its most recent quarter. The company's stock price has risen about 26% since mid February.
CBS shows may not be the ones that get the most buzz, but their viewers are loyal. For example, CBS stuck with The Big Bang Theory, and it is now the highest-rated comedy on the air. CBS's police and detective shows, such as the NCIS franchise, remain strong.
CBS Sports is also a leader, with NFL games, March Madness college basketball, The Masters golf tournament and more.
The network typically ranks first in overall viewers at the end of the television season in May, although some other network (often Fox) frequently argues that it is first with the desirable 25-54 demographic.
The company also owns the Showtime premium cable network, which has produced acclaimed shows like Ray Donovan, as well as the broadcast network The CW, home of The Flash and Supergirl.
In 2000, CBS came under the control of Viacom, which began as a spin-off of CBS in 1971. In late 2005, Viacom split itself and reestablished CBS Corporation with the CBS television network at its core.
Less than two weeks ago CBS reported results for the first quarter of 2016. It showed double-digit revenue growth and a new company record for earnings per share. The stock fits into the "market-beating returns" category.
Advertising was strong, growing 31% in all segments and 49% at the CBS television network, which is on track to come in first in total viewers for the 13th time in 14 years.
At the same time, the firm's subscription streaming services, CBS All Access and Showtime over-the-top, are reaching new, younger audiences and are beginning to make a meaningful contribution to the bottom line.
CBS made a new agreement with Chief Executive Officer Leslie Moonves, who has led the company through this recent successful period. The new agreement extends his term with CBS by three years through June 2019.
CBS achieved its striking results even as competitors like Walt Disney and Comcast struggled. The company's price-earnings ratio is just 17 -- a bargain.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.
