Last year was an outstanding one for the cable, telecom, satellite and tower stocks. In a new report, the J.P. Morgan research team has updated their monthly stock-ranking product, which is intended to provide clarity on their short-term expectations for stock moves within the wider context of its longer-term ratings. The new report also ranks their stocks based on their outlook on 2014.
With entertainment exploding, cell phone usage increasing at a breakneck pace and the demand for spectrum growing with each quarter, the top stocks to buy for 2014 merit a very close look by investors. After a huge 2013, where investors took home gains not seen since 1997, a premium will be put on stocks to continue their earnings growth. These top names to buy might fit the bill for 2014. The first three stocks are the overall top names to buy for this year.
Comcast Corp. (NASDAQ: CMCSA) is the top consumer cable and entertainment name for 2014. The largest cable company in the United States continued its push to be a top entertainment name. The J.P. Morgan analysts think 2014 will be another banner year for entertainment stocks, with continued strong pricing power, advertising spending growth and new digital platforms. Comcast shareholders are paid a 1.5% dividend. The J.P. Morgan price target is $58. The Thomson/First Call Target is $54. Comcast closed Thursday at $51.45.
American Tower Corp. (NYSE: AMT) has also been a momentum traders dream stock and is a top tower stock for 2014. The company announced last summer that it would be buying 4,500 wireless sites in Brazil and Mexico from NII Holdings for $811 million. Shareholders are paid a 1.5% dividend. The J.P. Morgan price target sits at $95, and the consensus is at $90.American Tower closed Thursday at $79.45.
Time Warner Cable Inc. (NYSE: TWC) rounds out the top three for 2014. The company has made tactical mistakes over the past several quarters, experimenting with various pricing and promotional efforts. The firm now seems to be moving in the right direction, emphasizing revenue per customer over raw customer growth. The J.P. Morgan price target for the stock is $131. Investors are paid a 2.1% dividend. The consensus price target for the stock is $130. But the stock closed Thursday at $133.83.
SBA Communications Corp. (NASDAQ: SBAC) owns and operates wireless communications towers in the United States, Canada, Costa Rica, El Salvador, Guatemala, Nicaragua, Panama and Brazil. The company leases antenna space primarily to wireless service providers on towers and other structures that it owns, manages or leases from others. The firm has seen solid earnings estimate revision activity over the past month, suggesting analysts are becoming a bit more bullish on the firm’s prospects in both the short and long term. The J.P. Morgan price target is $107, the highest on Wall Street, and the consensus is placed at $101. SBA closed Thursday at $88.42.
T-Mobile US Inc. (NYSE: TMUS) may be a surprise name to land on the J.P. Morgan list. Softbank, which already owns 80% of Sprint, has been eyeing purchasing the company at around $20 billion. Wall Street rumors have even suggested the company is in the process of lining up the debt sales to achieve the purchase. The deal could face stiff regulatory approval. The J.P. Morgan price target is $31, and may be raised. The consensus is at $32. The stock closed Thursday at $33.37.
Charter Communications Inc. (NASDAQ: CHTR) is another big cable name to make the list for 2014. The company may have an extremely bright future as it continues to pursue an acquisition of Time Warner Cable. In the company’s third quarter, Charter posted a more than 5% gain in top-line sales to $2.1 billion. Growth came in the form of improvements across not only Internet and commercial revenue, but video, as well. The J.P. Morgan price target for Charter is set at $150. The consensus is lower at $142. The stock closed Thursday at $134.76.
Centurylink Inc. (NYSE: CTL) is a name that appears to be a contrarian play. The J.P. Morgan team views the stock as inexpensive. They also see the generous dividend as well covered, and the stock buyback program can grow. Shareholders are paid an outstanding 6.7% dividend. The J.P. Morgan price target is $38, and the consensus stands at $35.50. CenturyLink closed Thursday at $31.65.
IntelSat S.A. (NYSE: I) rounds out the J.P. Morgan list of top names to buy for 2014. The company offers various on-network services, including transponder services; managed services that combine satellite capacity, teleport facilities, satellite communications hardware and other ground facilities to provide managed and monitored broadband, Internet, video and private network services to customers; and channel services primarily used for point-to-point bilateral services to telecommunications providers. The J.P. Morgan price target for the stock is $28, the same as the consensus objective. IntelSat closed Thursday at $22.65.
The explosion in everything from online streaming of videos and movies, to online gaming involving multiple players, continues to create a huge demand for broadband capacity, latency and speed. In addition, continued growth in cell phone usage and spectrum demand will continue to be a big 2014 theme. Investors that buy the companies that are satisfying the demand may be well rewarded now and in the future.