Like other top media companies, Viacom Inc. (NASDAQ: VIAB) has been crushed over fears of consumers “cutting the cord” or leaving cable and satellite programming. Viacom creates television programs, motion pictures, short-form video, applications, games, consumer products, social media and other entertainment content.
Its Media Networks segment provides entertainment content and related branded products through approximately 230 programmed and operated TV channels, including MTV, VH1, CMT, Logo, BET, Nickelodeon, Nick at Nite, Comedy Central, TV Land and SPIKE, as well as through online, mobile and apps.
Last year the company delighted shareholders with a very rich 21% dividend increase. Viacom has continued to reward shareholders and enhance its brands worldwide through the creation and acquisition of popular programs, new channels, successful motion pictures and other forms of entertainment, including video game offerings. Jefferies team that ratings are turning the corner and points to the continued massive discount the company trades in relation to its peers.
Viacom’s CEO recently announced plans to explore the sale of a minority stake in Paramount. Jefferies believes Paramount is worth at least $3.5 billion and that the current valuation implies the market values the studio at less than $1 billion, so a stake sale would help the company to realize some very outsized value.
Viacom investors receive a 4.3% dividend. The $49 Jefferies price target is a bit higher than the consensus target of $48.69. The stock closed Wednesday at $37.22.
This long-time innovator in the storage industry is a leader in the total addressable hard disk drive (HDD) market. Western Digital Corp. (NASDAQ: WDC) is an industry-leading developer and manufacturer of storage solutions that help to create, manage, experience and preserve digital content. It is responding to changing market needs by providing a full portfolio of compelling, high-quality storage products with effective technology deployment, high efficiency, flexibility and speed.
The company made a stunning $19 billion purchase of SanDisk last year. This could be a strong addition Western Digital’s current offerings, and the company could significantly benefit from SanDisk’s technology and portfolio leadership in the NAND flash semiconductor and enterprise flash systems market. While the deal has hit a snag and is being reset, Jefferies feels it still goes through.
The drop-off in the PC business helps to spur initiative in the company’s cloud business, and analysts estimate that the company’s gross profit contribution from Business Critical (cloud) drives will exceed that of PCs by the second half of next year. Of all the stocks beaten down due to the poor PC environment, Western Digital may have the most upside potential. Jefferies notes that in 2016 Enterprise HDDs will have an average three-year cost of $100 per year, versus $500 for NAND.
Investors receive a 4.68% dividend. Jefferies has a whopping $77 price target, and the consensus figure is $73.21. Shares closed Wednesday at $43.92.
If there was ever a time to look for value in the markets it’s now. With some multiples stretched and volatility spiking, we could be in for a rough ride, and these stocks may have a far better chance of riding the storm out, and the prices are dirt cheap at current levels.