Streaming War Battles Point to Oversold Value

AT&T (T) shares first rallied on Monday on news the company was splitting off its media assets. However, shares closed the day lower as traders saw what looked like a poor deal for the company.

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  • While that’s likely to weigh on shares, other media plays are starting to look more attractive as a result. That could lead to better returns, particularly for some of the more beaten-down names in the space.

    With AT&T moving from a 5 percent gain to a 1.4 percent loss on the news, coming off multi-month highs, now may be a good time to look at streaming operations that aren’t as pricey on a valuation basis and can move higher.

    Shares of The Walt Disney Company (DIS) are down a bit after their earnings last week. But a bigger value may be in ViacomCBS (VIAC).

    That company has seen shares lose nearly 60 percent of their peak value from a hedge fund implosion, and look a bit like the value play in the streaming media space.

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  • Action to take: Shares have been rangebound for several weeks, and seem to have support in the high $30 range. Investors may like shares here, as the drop has pushed the dividend up to 2.5 percent.

    For traders, a rebound in media names make the August $340 calls, trading for about $3.10, an attractive play here.

     

    Disclosure: The author of this article has positions in the stock mentioned here, and may make additional trades on this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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