Last week, the Alpha Algorithm identified a cable play in the form of Charter Communications (CHTR).
With this week’s Alpha Algorithm generating Comcast Corporation (CMCSA) as a recommendation, the cable sector is emerging as a big favorite among many Alpha Algorithm strategies. Comcast, a familiar name to many consumers, is among the world’s leading communication companies, providing basic cable, digital cable and high-speed internet services.
In response to challenges faced by all cable providers, Comcast is in the process of deploying digital video applications and high-speed Internet access service to expand the products available on its cable communications networks. As a result, the stock has begun a steady upward ascent over the past few months.
Comcast Corporation (CMCSA) vs the S&P 500 over three months.
Here are eight top investment strategies betting on Comcast Corporation (CMCSA).
1. Hedge Fund Alpha
Based on publicly available disclosures, successful hedge fund managers are investing in the stock.
2. Broker’s Best
Raymond James selected the stock as one that is expected to outperform the S&P 500 over either a six- or 12-month period.
3. Insider Sentiment
Comcast is one of 100 equally weighted U.S.-listed large- and mid-cap stocks chosen based on trading in a company’s stock by corporate insiders, price momentum and trailing 12-month volatility. Specifically, the increase in insider holdings is scrutinized.
4. Large-Cap Alpha Growth
The company is part of an alpha-seeking index that selects and weights growth stocks from the S&P 500 Growth Index. The proprietary methodology uses price appreciation — among more traditional factors — and weights the constituents based on their respective growth scores.
5. Fundamental Strength
A top U.S. stock based on fundamentals measured by book value, cash flow, sales and dividends.
6. Goldman Sachs’ Active Beta
The stock is selected according to four factors — value, quality, momentum and low volatility. These, in turn, are based on criteria including book value, sales and cash flow scaled by share price, profit/assets or return on equity (ROE), risk-adjusted returns and daily standard deviation of returns.
7. Small-Cap/Value Tilt
Selected using a multi-factor modeling approach, the stock is a smaller-cap or value stock designed to enhance portfolio risk/return characteristics.
8. Low Interest-Rate Sensitivity
A large-cap U.S. stock selected for its low volatility and positive price performance in a rising-interest-rate environment.
Buy Comcast Corporation (CMCSA) at market today and place your stop at $68.00.
If you want to play the options, I recommend the March $72.50 calls (CMCSA170317C00072500), which last traded at $2.50 and expire on March 17.
You stopped out of Verizon (VZ) on Jan. 24 at $50.26 for a 6.91% loss.
You stopped out of Berkshire Hathaway (BRK.B) on Jan. 23 at $159.10 for a 10.04% gain.
Adhering to your stops is an important part of investing. At the same time, it is also important to recognize when this was due to a short-term technical market action.
With Berkshire Hathaway (BRK-B) still favored by eight Alpha Algorithm strategies, I am recommending that you re-enter this position, setting your new stop at $155.00.
Nicholas A. Vardy