Avoid CBS Corporation (CBS) and Buy This Media Stock Instead

At a multiple of 15x, this translates to a future stock value of $67.50. Discounting backwards by 10% yields a present value that is 17% above the current market value. For a stock that has more than double the volatility of the S&P 500 and is near a 52-week high, CBS is not attractive right now.

I recommend a cheaper and more stable firm to balance the risk inherent in CBS Corporation (NYSE:CBS). Comcast Corporation (NASDAQ:CMCSA) trades at 19 times past earnings and has grown profits by the double-digits over the past five years. Analysts rate it a 1.9 out of 5, where “5” is a “buy,” so the wind is certainly in your favor if you choose to invest. Further, the beta is comparatively low at 1.1 and margins are positioned to improve from increased self-installations.

Conclusion

Media stocks have risen dramatically. Disney, which has been stuck in the $35 range for over a decade, is now at around $64 and still positioned to appreciate. The company’s successful CEO recently got his contract extended, which adds more certainty to the growth story. In my view, CBS’ outperformance in the last 52 weeks has been overdone, given that Disney has done more to innovate and move beyond the core brand. For this reason, I strongly recommend weighting your portfolio more toward Disney.

The article Avoid CBS and Buy This Media Stock Instead originally appeared on Fool.com and is written by David Gould.

David Gould has no position in any stocks mentioned. The Motley Fool recommends Walt Disney (NYSE:DIS). The Motley Fool owns shares of Walt Disney. David is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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