The last three weeks have been volatile for the entire market, and they have been downright terrible for Nielsen Holdings (NYSE: NLSN), T Mobile (NASDAQ: TMUS), and Discovery (NASDAQ: DISC.A) (NASDAQ: DISC.B) (NASDAQ: DISC) These three stocks are down 30%, 13% and 67%, respectively, from their most recent highs, with each name falling deeper into multi-week low territory this month. It is sheer misery for their shareholders.
But forward-thinking investors who can look past the current noise of the market know the time to buy good stocks is when they’re falling – the deeper the red, the better.
With that as a backdrop, here’s a closer look at three companies that have had a rough month. They are each pretty solid in their own way, but the bullish argument is reinforced by the fact that each other’s stocks are heavily discounted.
1. Nielsen Holdings
Yes, it’s the same Nielsen that monitors consumers’ TV viewing habits so advertisers can make informed spending decisions when they buy ad time from cable TV channels and networks. It offers similar services for the benefit of web advertisers.
It’s no exaggeration to suggest that Nielsen wasn’t quite ready for the popularity of streaming video and the continuing implosion of traditional cable TV. But the company made adjustments. For example, in early 2016, Nielsen launched what he calls “social content ratings” designed to measure the amount of conversation taking place on Twitter and Facebook relating to particular television programs. In late 2017, he unveiled a way to keep tabs on smart viewers to help omnichannel marketers get more bang for their buck.
However, these are ideas Nielsen arguably should have put on the table long before they actually were. CEO David Kenny even conceded in a public letter written earlier this month – after Nielsen’s accreditation for local ratings was suspended for miscounting some viewers last year – that “we need to go more. fast in moving our measure forward because the audience itself is moving faster. more than 30%.
The point is, the much-needed overhaul seems to finally materialize. Kenny promised in his letter to (among other things) “allow true comparability on all platforms and deduplicate audiences.” Last week, it started delivering on its promise by partnering with PubMatic to make it easier to buy omnichannel ad inventory using consumer-specific data like buying habits, intent, etc. Earlier this week, the company unveiled an ad impression measurement initiative that is more in line with how advertisers now buy ad inventory.
There is still some repair work to be done, but the recent drama by Nielsen Holdings has also served as a wake-up call even though the market is yet to see it.
It’s hard to compete with established players and familiar names like AT&T (NYSE: T) and Verizon. Never say never, however. Even as saturated as the US wireless market is, T-Mobile connected 1.3 million (net) new postpaid devices in the last quarter, which is more than AT&T or Verizon can say. Obviously, the company is doing something right.
Don’t be surprised to see more of this leading growth continue. From mid-October, T-Mobile and Metro by T-Mobile service will be offered to more than 2,300 Walmart stores as well as via Walmart.com, which more than doubles the presence of the company in physical premises. The expanded footprint is expected to appeal to rural customers, in particular, looking to connect to T-Mobile’s 5G network, which is “the fastest and most reliable in the country” … at least according to T-Mobile.
Investors were not impressed with these initiatives. On the contrary, the market was deterred by last month’s cyberattack which revealed personal and sensitive data concerning nearly 50 million T-Mobile customers. This data breach, in fact, is what caused the massive sell-off that began in mid-August.
The problem is, these salespeople have taken things way too far. Even after factoring in the impact of the recent cybersecurity misstep, the analyst community still views T-mobile as a solid buy and still posts a consensus price target of just over $ 171 per share. That’s almost 31% higher than the current share price, close to $ 131.
Finally, add Discovery to your buy now, not later stock list.
Discovery is the name of the outlet that plans to buy WarnerMedia from AT&T. The deal was announced in May and reignited a sell-off that had been in place since April, pushing stocks to the 10-month low they had just reached on Tuesday. The market apparently doubts whether the combination of this respectable but not fascinating cable TV brand with a movie and streaming powerhouse – Warner is the name behind HBO Max – is the best possible solution for either outfit in a world where entertainment has become a commodity.
The point is, however, that the entity that will be called Warner Bros. Discovery has many powerful tools to work with to create a powerful and comprehensive platform.
Take the example of HBO Max. It is still only a fraction of the size and age of Netflix. But this has already made a big impression on consumers. In a recent survey by Whip Media, 80% of people said they were satisfied or very satisfied with the nascent streaming service, exceeding Netflix’s satisfaction score.
Discovery is quietly hitting its own circuits outside of the traditional cable TV business. At the end of June, it was serving 17 million of its own streaming customers with a less flashy platform like Discovery +. That’s up from around 11 million at the end of last year, and an incredible number for an organization that has only recently started to take streaming seriously. Additionally, CFO Gunnar Wiedenfels recently pointed out that the ad-supported version of Discovery + actually generates more revenue per user than the ad-free subscription version. It’s a subtle nod to the idea that Discovery can survive viewer attrition linked to the cut of the cord.
The point is, while we’re still not sure exactly what things will look like after the acquisition, the company has plenty of great options for bundling Discovery + and HBO Max.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.