Nasdaq Composite Closes At Record High: 5 Top-Ranked Picks
Zacks Investment Research | Jun 14, 2018 09:25PM ET
On Jun 14, the tech-heavy Nasdaq Composite index scaled a fresh high at closing. Yesterday’s rally can be attributed to strong showing by media, telecom and tech stocks fueled by market anticipation of mega merger deals. This also highlights the gradual fading of investors’ apprehensions regarding the trade and geopolitical issues, which was the primary reason behind severe market volatility in the last three months.
On Jun 12, the favorable verdict regarding unconditional merger of AT&T (NYSE:T) and Time Warner by a U.S. district court opened the floodgate of mergers and acquisitions (M&A) in the integrated telecom-tech-media industry. The market is rife with speculations of similar deals, consequently propelling major media and telecom stocks. Market watchers consider this as further evidence of upbeat sentiment about the economy.
With investors finally coming out of broad-based market fluctuations, it will be prudent to invest in tech stocks that are part of the Nasdaq Composite.
Integration of Telecom-Cable TV-Media: A Survival Strategy
Fierce competition from tech behemoths has completely altered the market landscape, compelling telecom, cable TV and media operators to band together in order to survive. Vertical integration of distribution and content creation will create a unique platform to serve any sort of communications, broadcasting along with a vast area of entertainment industry.
In order to derive maximum synergy from the combined video content and video distribution platform, telecom, cable TV and media operators are aggressively penetrating the digital advertising technology market. Currently, tech behemoths like Alphabet (NASDAQ:GOOGL), Facebook (NASDAQ:FB) and Twiter are major beneficiaries of digital advertisements.
M&A to Provide Economies of Scale
The merger between AT&T and Time Warner poses a fresh challenge to the likes of Alphabet Facebook and Twitter which dominate the online advertising space. If AT&T now decides to combine it broadband, mobile and online video streaming services with Time Warner’s films, television shows and sporting events, it will be capable of becoming a serious threat to tech companies.
Court’s approval of AT&T-Time Warner deal immediately triggered a merger battle between Comcast (NASDAQ:CMCSA) and The Walt Disney for majority assets of Twenty-First Century Fox. Moreover, stocks prices of other major media companies like Disney, CBS, Viacom and Discovery Communications (NASDAQ:DISCA) also increased as all of these became lucrative takeover targets.
Stock prices of telecom giants like Verizon, AT&T, Comcast and Charter Communications (NASDAQ:CHTR) also increased as these potential acquirers of media companies will have a highly diversified business model and significant economies of scale if these buyouts take place.
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With U.S. economic growth being the sturdiest since recession, unemployment at an 18-year low, and both consumer and business confidence at high level despite the ongoing trade conflict, it makes sense to ride out the amazing growth momentum. At this stage, investment in Nasdaq stocks with strong earnings momentum will be lucrative option.
We have narrowed down our search to five stocks, each of which has a Zacks Rank #1 (Strong Buy) and strong growth potential. You can see Original post
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