Comcast Corp. Class A shares (CMCSA) — At What Price Should I Buy?

Comcast Corp. (CMCSA, $29.19) provides video, internet and phone services to over 50 million U.S. customers.  Comcast is also a media and entertainment industry leader through its recent purchase of a controlling stake in NBC Universal.

Revenue and earnings per share (EPS) have been consistently increasing for many years, with 2011 revenues coming in at $58 billion.  Wall Street projects EPS to rise 18%, 17% and 17% in fiscal years 2012 through 2014.  This rapid earnings growth is very attractive to growth stock investors.

“We see other potential near-term catalysts such as bundled products penetration and commercial services (for cable distribution), as well as content licensing and broadcast retransmission (for NBCU).” — Standard & Poor’s Research

The company increased its dividend by 44% this month, to a current yield of 2.22%.  There is ample financial flexibility for Comcast to continue implementing dividend increases and share buybacks, with current plans to buy back $3 billion worth of shares in 2012.  Based on the company’s history of large dividend increases, I strongly recommend Comcast A shares for growth & income investors who place a high priority on dividends.

The stock carries a price earnings ratio (PE) of 15.6.  The six-year PE range has been between 9 and 41.  (The numbers prior to that were ridiculously high.)

The company’s long-term debt ratio is 37%.

Comcast stock is reaching back up to its 2007 high of $30.18, but after a 50% price move in the last six months, the stock’s probably going to have to take a breather and rest a bit before breaking through resistance at $30.  Watch for a pullback to approximately $26 during the next market correction.  Investors who jump in at that price can lock in a dividend yield of 2.50%.  Traders who buy at $26 and sell at $30 could make 15% profit in the short-term — but I’d be more inclined to keep the stock for subsequent growth, and use stop-loss orders to protect the downside.

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