Stock Pick

  • Which is the best ASX entertainment media share?

    Cityscape at night superimposed with pictures from digital media streaming organisation

    Joe Rogan has the hottest podcast in entertainment media. Last week, we learned it would be hosted exclusively on Spotify’s platform. Its share price jumped immediately. Today, the Foxtel Binge streaming service launched here in Australia. The tectonic plates of the media industry are shifting again, and not everyone is going to make it through.

    There are 3 major ASX entertainment media shares that generate and distribute news: News Corp (ASX: NWS), Nine Entertainment Co Holdings Ltd (ASX: NEC), and Seven West Media Ltd (ASX: SWM). Whichever is the first mover will be the better investment. 

    Replacement revenue

    When REA Group Limited (ASX: REA) and SEEK Limited (ASX: SEK) started to eat into classified revenues, it was News Corp that acted first. Today, News Corp owns 62% of REA Group, which is one of the better value companies on the ASX, in my opinion.

    Fairfax also launched and spun off Domain Holdings Australia Ltd (ASX: DHG), which is also a real estate classifieds service. Nine Entertainment holds 52.9% of Domain through its acquisition of Fairfax. Domain is a far more lacklustre version of REA, however. Today it is 1/11th of the size by market capitalisation. There is a lot of market share it can capture, but it just doesn’t seem interested at the moment.

    None of the major ASX entertainment media shares have a significant stake in car classifieds online company Carsales.Com Ltd (ASX: CAR). Given recent history, this would appear to be a mistake. 

    Seven West Media is in the early stages of a range of online and technology investments. None, however, can challenge the revenue replacement streams of Nine or News Corp. 

    Entertainment media diversity

    All entertainment media companies own newspapers, television channels and radio stations. However, News Corp stands out as the 65% owner of Foxtel, and the 100% owner of 24-hour news channel Sky News. This provides it with exposure through Foxtel to the new Binge streaming service, should it prove successful.

    In the realm of radio, Nine Entertainment has both 3AW in Melbourne and the revenue juggernaut of 2GB in Sydney. It has recently lost revenue generator Alan Jones as a presenter, but he will be replaced by the affable and popular Ben Fordham. 

    Seven West has launched an innovative product in its new morning podcast The West Live with Jenna Clarke. This has had a monster reception in the West and has sidestepped local radio. They regularly have the Premier, state ministers, federal ministers, local mayors, as well as local entrepreneurs and billionaires. I listen to it daily and already many of my colleagues and friends have discovered it by themselves.

    Management

    Of all of the 3 ASX entertainment media shares, the financial history of News Corp Australia is the most compelling. Seven West Media and Nine Entertainment are the least compelling – across all major valuation metrics they have gone backwards for 10 years. News Corp, on the other hand, has been able to grow cashflow at a compound annual growth rate of 13.4% for the past 7 years. 

    Foolish takeaway

    I am a big believer in the future of the news business in all of its forms. In my view, Spotify’s Rogan deal, The West Live podcast, and the move to streaming shows there is the potential for one of the incumbent ASX entertainment media shares to make very big strides into the future. It depends which one moves first. 

    If you’re watching the ASX media sector from afar, here are 5 ASX shares you might want to take a closer look at instead.

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    Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com Limited, Nine Entertainment Co. Holdings Limited, REA Group Limited, and SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post Which is the best ASX entertainment media share? appeared first on Motley Fool Australia.

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  • 3 strong ASX 200 shares to buy for a retirement portfolio

    Retirement

    If you’re approaching retirement, then now might be the time to start focusing on capital preservation and income rather than chasing gains.

    But which shares should you buy? I believe the three shares listed below could be great additions to a well-balanced retirement portfolio. Here’s why I like them:

    Coles Group Ltd (ASX: COL)

    The first company I would consider adding to a retirement portfolio is Coles. I think the supermarket operator is one of the most defensive shares on the ASX. This is because the bulk of its earnings come from its supermarkets which, as we have witnessed this year, traditionally perform well regardless of that is happening in the rest of the economy. Another reason for retirees to consider buying Coles is its dividend. With management aiming to pay out upwards of 90% of its earnings to shareholders, I believe its dividend can grow materially over the next decade or two

    Goodman Group (ASX: GMG)

    Another option to consider for a retirement portfolio is Goodman Group. It is an integrated commercial and industrial property group which owns, develops, and manages industrial real estate in 17 countries. I like the company due to the diversity of its operations and its exposure to quick growing markets such as ecommerce. Overall, I believe it is well-positioned to deliver solid earnings and distribution growth for a long time to come.

    Woolworths Limited (ASX: WOW)

    This retail conglomerate could be another good option for a retirement portfolio. I like Woolworths due to its strong brands, entrenched customer base, and defensive qualities. Combined, I believe they have positioned the company perfectly to deliver robust earnings and dividend growth over the next decade and beyond. And while its shares don’t provide the biggest dividend yield, a fully franked 2.9% yield is not to be sniffed at in this low interest rate environment.

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post 3 strong ASX 200 shares to buy for a retirement portfolio appeared first on Motley Fool Australia.

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  • Top brokers name the latest ASX 200 stocks to sell today

    shares to sell

    The threat of a new cold war between China and US allies aren’t enough to dent the positive mood on our market.

    The S&P/ASX 200 Index (Index:^AXJO) jumped 1.5% during lunch time trade as confidence about the post-coronavirus recovery grows.

    But rebounding share prices might be an opportunity to take some profit off the table or to lock in tax-losses to offset FY20 capital gains. Here are the latest sell ideas from top brokers.

    Losing bet

    One stock in the firing line is Tabcorp Holdings Limited (ASX: TAH) as Citigroup initiated coverage on the lottery and wagering group with a “sell” recommendation.

    The broker believes the stock is facing a growth challenge as the run of big lottery jackpots that have driven past sales is running out of puff.

    The closure of wagering outlets due to the COVID-19 pandemic and an uncertain sports betting outlook are other factors weighing on the stock.

    Lottery earnings aren’t that stable

    The view that Tabcorp’s lottery business deserves to trade at a big premium to the market as it’s seen to be as dependable as infrastructure assets is also misguided, according to Citigroup. This is because lottery sales fluctuate with discretionary spending, surge and ebb with jackpots and have no inflation protection.

    If the group wants to break out of its low growth rut, it will need to either expand into the US sports betting market, enter Western Australia lotteries, open new wagering outlets in WA and New Zealand and internalise online lotteries.

    That last point will be especially worrying for Jumbo Interactive Ltd (ASX: JIN), in my view. It suggests Tabcorp might stop Jumbo from selling lotteries so it can monopolise the channel.

    Citi’s price target on Tabcorp is $2.80 a share.

    Time to sell

    Meanwhile, the surge in the Afterpay Ltd (ASX: APT) share price to a new record high today could be a signal to sell, if you believe UBS.

    The broker reiterated its “sell” recommendation on the buy now, pay later group even after management reported having five million active customers in the US.

    The COVID-19 shutdown that is driving a spike in online sales provides an additional tailwind to Afterpay as 76% of its Australia and New Zealand sales were done via the web in 1HFY20.

    “While we think COVID-19 could accelerate positive structural changes for APT, we are cautious to extrapolate the magnitude of recent growth in online’s share given the recent forced closures of shops,” said the broker.

    Priced beyond perfection

    Further, while the latest update from Afterpay is better than most were expecting, UBS thinks the good news is more than priced into the stock.

    The broker is assuming Afterpay will secure 9.7 million active users by June, which is higher than management’s withdrawn guidance of 9.5 million.

    Even on the more optimistic projection, UBS reckons fair value for Afterpay is $14 a share. That is a long drop from the nearly $48 level the stock is currently trading at.

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    Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Jumbo Interactive Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

    The post Top brokers name the latest ASX 200 stocks to sell today appeared first on Motley Fool Australia.

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