A Way To Get Paid From The Streaming Wars
Stop me if you’ve heard this before: there is drama in Congress.
Yes, I realize I could write that sentence almost every week. There is almost always drama in Congress. But this time, it’s about how large stimulus checks should be.
While the stimulus is needed, there seems to be little thought about how much stimulus is needed. Congressional leaders and the White House seem to pick numbers out of the air. I am fairly certain that “policymaking by polling” will continue in the next Congress.
While that strategy leads to suboptimal policies, a fiscal stimulus should help the economy. It should also help a number of companies boost their earnings.
Stick With What’s Working
If we want to stick with this theme and look for potential winners, then I think it pays to stick with what’s working. And streaming entertainment companies have been big winners in the current economy. They are likely to continue winning in the next year.
Companies like Netflix grew as families stayed home and subscribed. Many are likely to maintain their subscriptions even when local communities reopen.
But rather than looking to the streaming companies themselves, I recently recommended a “picks and shovels” trade that is a little safer.
A “picks and shovels” trade is a classic way for investors to avoid the high-risk trades in a hot sector by searching for a safer alternative in an adjacent industry that is helping to facilitate the trend. It’s often explained with the story of Levi’s jeans…
“During the California gold rush of the late 1870s, Jacob Davis and Levi Strauss wanted to cash-in on the action, but they didn’t grab their tin pans and head for the hills. The two men invented the riveted-pocket work pants we know today as jeans. Cool. But what’s more important is the story of what the men didn’t do.
They didn’t pan for gold.
When you pan for gold you have a slim chance of a big payoff. For most gold miners, they lived a hard life and came home with nothing after betting everything. But if the miners took the Levi’s approach, they would’ve prospered off every prospector who came through town — regardless of their gold haul.
Levi’s sold picks and shovels… and pants, of course.”
How I’m Trading This
If consumers want streaming services, then that’s going to require a lot of data. And that’s where Comcast Corporation (NASDAQ: CMCSA) comes in.
Comcast actually owns several picks and shovels for the streaming sector. The company offers broadband services, cable and satellite television services, and content services through Universal Studios, the Peacock streaming network, and channels such as Bravo and NBC.
The chart below shows the technical case for the stock.
CMCSA is bouncing off of important support, and that limits downside risk. The support coincides with a level where the stock offers value. At the bottom of the chart, we see the stock is on a momentum “buy” signal using my Income Trader Volatility (ITV) indicator.
Action To Take
Each of CMCSA’s divisions I named above can grow in 2021. And the company’s theme parks and other physical businesses like the Philadelphia Flyers NHL team can deliver significant growth as they return to normal as well.
This should result in CMCSA consistently beating earnings estimates — and that should lead to gains in the stock.
At current prices, CMCSA yields about 1.7%. But rather than simply wait for the stock to rebound, there’s a way we can get paid close to what the stock yields – and we can get it immediately.
Either way, in the long run, I think investors can do well with CMCSA. But by getting paid upfront, we will either protect ourselves in the event things doing quite go according to plan.
If you’d like to learn more about how my subscribers are using this simple technique to get paid hundreds (or even thousands) of dollars every month, then check out this report right now.