Media stocks have been on the nose recently, with all 9 names in the space falling a considerable amount. Has this created value in the space?
Today, the 9 listed media stocks will fall to 8 following the merger of Farifax (ASX: FXJ) and Nine Entertainment (ASX: NEC).
1 Newscorp (ASX: NWS) $18.56
Market stalwart NWS has been the best of the bad bunch over recent months and has actually outperformed the index over the last 5-days. The stock spiked up towards $20 earlier this month following the release its quarterly earnings. The analysts reaction was mixed which has been reflected in the stocks choppy price action.
NWS owns ~61% of REA Group (ASX:REA) which we will look at later, and speculation has been circulating that they may enter into a minor commercial advertising agreement with SWM in part response to Nine’s takeover of Fairfax which gained approval in the Federal Court earlier this week i.e. the corporate wheel in this sector keeps turning.
Newscorp (ASX: NWS) Chart
2 Carsales.com (ASX: CAR) $12.25
CAR has clearly found some support around $11 but technically we can still see sub $10 – MM has been bearish CAR for most of 2018. The second hand car market has been weakening alongside the local housing market, although not to the same degree at this stage. We covered the sector in an income report a few weeks ago (click here). Automotive Holdings (ASX: AHG) has been a standout casualty with the stock halving in 2018.
Carsales.com (ASX: CAR) Chart
3 Nine Entertainment (ASX: NEC) $1.73
NEC has tumbled 41% in 2018 being pulled lower by its proposed takeover / merger partner Fairfax which has witnessed a collapse to a 52-week low. Thinking about the Nine (post Fairfax takeover) their main growth assets are Stan and Domain Holdings (ASX: DHG), which Fairfax holds nearly 60% of after spinning out the rest on late 2017.
Unfortunately for NEC, Domain’s performance has been disappointing since listing, with the shares hitting a record low of $2.29 earlier this month. They closed on their first day of trading at $3.69
Nine Entertainment (ASX: NEC) Chart
4 REA Group (ASX: REA) $75
REA Group which is better known as realestate.com.au to most of us recently posted 17% revenue growth for Q1 of this financial year.
Considering that REA is a growth stock its relative small pullback is an excellent indication of the strength on the underlying business. The bull case for REA is that as house prices fall houses take longer to sell and require a greater marketing effort which increases revenue. ASX: REA share price was surging recently and we covered it in this report.
REA Group (ASX: REA) Chart
5 oOH! Media Ltd (ASX: OML) $4.17
OML is a fairly new kid on the block and it’s another growth stock that’s endured a tough 2018. The company is becoming a marketing and media conglomerate which could in the years to come help Sydney and Melbourne resemble other international cities with huge neon advertising adorning buildings.
Last financial year oOhMedia reported a net profit of $9.2 million on revenue of almost $200 million. Still yielding 3.25% fully franked.
Also in the current financial year OML has completed the $570 million acquisition of outdoor advertising rival Adshel.
oOH! Media Ltd (ASX: OML) Chart
Continue reading below to see Market Matter’s actionable view on these stocks