Buying low and selling high is a rule that's easy enough to follow -- but fear of missing out can cause investors to flock to the latest and greatest idea, ignoring valuation and giving into speculation.

It's also dangerous because investors can grant irrational premiums to assets that get swept up in the craze.

From time to time, though, one can have cake and eat it, too: an investment with an attractive valuation and strong sentiment behind it. Right now, Comcast (CMCSA) - Get Report shares are a perfect example.

Comcast Is Hitting All-Time Highs 

The Philadelphia cable-and-communications company's shares have soared throughout 2019, up some 30% year-to-date to record highs.

Even at the highs, analysts shower the stock with upgrades. For instance, in June Rosenblatt initiated Comcast with a buy rating and a $50 price target. More recently, Goldman Sachs added Comcast to its conviction-buy list with a $54 price target. That $54 figure implies 21% about upside from today's trading.

But even at these record prices, Comcast trades for just 15.7 times trailing 12-month earnings, a sub-market multiple and well below the company's long-term average price-to-earnings multiple of 24 times.

In recent years, traditional-media plays like Comcast have been discounted by the market because of the fears associated with cord-cutting -- consumers canceling multichannel cable and moving to streaming and other services.

Because of this, Comcast's average p/e multiple over the past five years fell to 19 times, which is notably lower than the aforementioned 20-year average.

Either way you slice it, Comcast's current multiple is significantly lower than just about any trailing average that you could choose, which points to strong upside potential. 

Double Digit Bottom-Line Growth 

But it's not just mean reversion leading to multiple expansion that indicates this company's upside.

Comcast grew its bottom line 18% in 2017 and then 24% in 2018. This double-digit EPS growth trend is expected to remain in place for the foreseeable future, with consensus analyst estimates for 2019, 2020 and 2021 coming it at 19%, 11% and 11%, respectively.

For 2014, Comcast reported EPS of $1.47. Assuming that the company's 2019 total lands near the current $3.04 estimates, Comcast will have doubled its EPS in just five years. Not many other companies in the market can boast similar results.

Furthermore, finding equities with this type of double-digit growth potential and a sub-market multiple is extremely difficult.

Looking ahead using those estimates, Comcast's forward p/e reaches bargain-barrel proportions at 12.9 times and 11.7 times 2020 and 2021 estimates.

At the depths of the Great Recession in 2009, Comcast's p/e multiple bottomed out at roughly 13.5x. More recently, during the broad market selloff of early 2018, Comcast shares found similar support in the 13.7x area.

When I see forward p/e multiples coming in lower than Comcast shares have traded at in decades, the $50+ price targets recently set by other analysts make a lot of sense. 


In short, this is a blue-chip name with a diversified revenue stream and operations spanning from content production and distribution to internet and mobile services to theme parks and experiential entertainment.

Even after making waves in the M&A world recently with its $39 billion acquisition of Sky, Comcast maintains a strong balance sheet and an A- S&P credit rating.

Sky's assets give Comcast growth potential in emerging markets and global scale that ensure that it can continue to compete in the digital space moving forward.

And last but certainly not least, the company is well known for generous shareholder returns. Comcast's annual dividend-growth streak is now 12 years and has given investors a dividend-growth CAGR of 19.8% over the past decade.

What's not to like?

Nicholas Ward is long CMCSA.