We recently compiled a list of the 10 Best Broadcasting Stocks to Buy. In this article, we are going to take a look at where Nexstar Media Group Inc. (NASDAQ:NXST) stands against the other broadcasting stocks.
Technological advancements have transformed the global broadcasting market, just as much as any other industry. Innovation has elevated the broadcasting experience for an average viewer, offering a wide range of rich and high-quality content. Hence, in 2022, we had a global broadcasting market valued at $343.35 billion, as reported by Grand View Research. By 2030, this number could reach $448.34 billion, growing at a compound annual growth rate of 3.9% through the forecast.
As machine learning and AI help gain companies a competitive edge, AI-powered solutions are being used in broadcasting to enhance video quality, streamline live broadcasts, and personalize user experiences.
For instance, Korbyt, a workplace experience platform, recently launched its Machine Learning Broadcast solution, which uses an AI-powered camera to adjust content based on viewer engagement. In essence, it uses smart technology to show different content on screens based on who’s watching and how they react. So, if people are spending a lot of time looking at a certain ad, Korbyt might show that ad more often. It can even optimize recommendations according to people’s preferences and create new content for them.
The global advertising and broadcast industries are also close and benefit from one another. One impact currently is the surge in political advertising spending on broadcasting platforms due to the US election campaign. As the demand for advertising space across various platforms rises, advertising rates for broadcasting companies with increase and boost their revenues.
Forbes reported that the total spending reached $8.5 billion across TV, radio, and digital media in the last election cycle. This was 30% higher than the $6.7 billion projected earlier that year, and 108% more than spending in 2017-2018, which was a record at that time. GroupM projects a record-breaking $15.9 billion investment in political ad spending for the end of 2024.
As campaigns intensify their advertising efforts, especially in the weeks preceding the election, broadcast companies can anticipate a significant rise in revenue, given the heightened demand for airtime to reach voters.
According to Emarketer, 45% of the total digital political ad spending will be seen on CTV (connected TV). As major companies in the networking, entertainment, and streaming industry continue their ban on political content, the major benefit of this spending will go to broadcasting companies.
Goldman Sachs’ Jonny Fine, the global head of investment grade debt, in a recent discussion, mentioned that the US election will likely be a big market event. He says that the outcome could most definitely differ depending on which candidate emerges victorious, but investors need to be prepared for the potential market volatility nonetheless. However, when it comes to realizing short-term gains from elections, the 2019-2020 US election cycle advertising spending validates the projections for this year.
The Business Research Company reports that North America dominated the broadcast market in 2023, but Asia-Pacific is expected to grow the fastest in the coming years. With a promising growth potential, this industry can reward those who watch it closely and observe its dynamics. In this context, we are here with a list of the 10 best broadcasting stocks to buy.
Methodology
To compile our list, we sifted through ETFs, stock screeners and online rankings to compile a list of 15 best broadcasting stocks to buy. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of a broadcasting company’s television stations, showing the power of the company’s media presence.
Nexstar Media Group Inc. (NASDAQ:NXST)
Market Cap: $5.51 billion
Number of Hedge Fund Holders: 34
Nexstar Media Group Inc. (NASDAQ:NXST) is a media company that broadcasts local news and entertainment, with a commitment to quality journalism.
On June 1, the company launched NewsNation, a 24/7 cable news network, providing live coverage of recent news events. The company is expanding content offerings with new premier shows like Trivial Pursuit and Scrabble, and renewed series like All American and Wildcard. It has also secured the rights to broadcast PAC-12 football games and the 2024 Snoop Dog Arizona Bowl on The CW. It’s expanding its CW network affiliation, with 3 additional stations.
Q2 looked great as the distribution and advertising revenue rose. Political advertising generated a record revenue through comprehensive political news and live debate coverage, while non-political advertising sequentially improved. Overall, these improvements resulted in 2.34% year-over-year growth in the second quarter, translating into a revenue of $1.27 billion. The earnings per share were $3.54.
Recently, there have been instances of insider selling. President of Networks, Sean Compton, sold 3,930 shares on August 16, with 10,684 remaining shares. Executive VP and CRO, Michael Strober, sold all of his shares on August 21. A director at the company, Armstrong D Geoffrey, sold 3,505 shares on August 26. He now owns 9,250 shares. Executive VP and General Counsel, Rachel Morgan, sold all of her shares on August 27. Such instances indicate concerns about Nexstar Media Group Inc.’s (NASDAQ:NXST) prospects.
Yet, the company and its partner stations earned multiple awards for journalistic excellence over time which improved trust in the company. Its expansion strategies also position the company for substantial growth, making it one of the best broadcasting stocks to buy.
Currently, 34 hedge funds have positions in this company. Citadel Investment Group is the biggest stakeholder with a position of $113,527,100.
Here is what Richie Capital Group has to say about Nexstar Media Group, Inc. (NASDAQ:NXST) in its Q1 2022 investor letter:
“Nexstar Media Group (NXST up 24.8%) – The television broadcasting and digital media company surged during the quarter after presenting at an investor conference where management pointed to a strong 2022 for both political advertising and retransmission. They have exposure to more than 80% of markets with competitive mid-term political races. NXST is developing new ad categories such as sports betting and they are focused on expanding digital ad revenue and providing digital solutions to local advertisers. Auto advertising will return in the fall as auto dealerships re-enter the market to sell their replenished inventory.”
Overall NXST ranks 1st on our list of the best broadcasting stocks to buy. While we acknowledge the potential of NXST as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NXST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
Hedge Fund Resource Center