Cablevision Systems Corporation (CVC): Should We Follow Mario Gabelli Into This Stock?

DirecTV has the cheapest valuation of the trio. At $62 per share, DirecTV is worth more than $34.6 billion on the market. The market values the company at 6.9 times EV/EBITDA. DirecTV’s two main markets are the U.S. and Latin America. It had around 20.11 million customers in the U.S. and more than 16.3 million customers in Latin America. In the first quarter of 2013, DirecTV experienced 8% growth in revenue to $7.58 billion, thanks to higher ARPU in the U.S. market and subscriber growth in Latin American market.

Its free cash flow decreased from $952 million in the first quarter last year to $710 million in the first quarter this year due to higher capital expenditure in the U.S. and the timing of receivables. What makes me interested in DirecTV is its significant share repurchases program. In the first quarter, DirecTV spent around $1.38 billion to buy back its shares.

DirecTV expects to generate EPS of $5 or more for 2013, excluding the impact of $166 million in Venezuelan devaluation charge and $60 million non-cash charge for Mariners transaction. Looking forward, DirecTV would keep growing in its Latin American business and drive its EPS higher with its frequent share repurchases.

My Foolish take

All three businesses seem to be good stocks for investors’ long-term portfolios. Among the three, I like DirecTV the best with its lowest valuation, potential growth in the Latin American market, and its consistent and aggressive share buybacks.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends DirecTV.

The article Should We Follow Mario Gabelli Into This Stock? originally appeared on Fool.com and is written by Anh HOANG.

Anh 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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