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 Saga Communications, Inc. (NASDAQ:SGA) 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 FM radio tower in the metropolitan skyline with the broadcast company's branding.
Saga Communications, Inc. (NASDAQ:SGA) is devoted to acquiring, developing, and operating broadcast properties. It owns and operates radio and television stations to broadcast shows, news, music, and advertisements over the airwaves.
Two main revenue contributors for the company are its ‘streaming’ and ‘best of’ segments. Streaming was up 34%, and the best of program, which is essentially just a community online voting process for burgers, dentists, and so on, was up 15%. Despite these surges, the year-over-year growth fell 1.48%, generating a revenue of $28.74 million in Q2. The earnings per share were $0.4.
Saga Communications, Inc. (NASDAQ:SGA) is also expanding its services into online news and community sites in 18 markets, inspired by the need for local news during deployments. The first online news site, ClarksvilleNOW, prioritizes practical local news and avoids opinion pieces and in-depth investigative reporting.
The company expects to report its financial performance on a “same-station basis”, as it purchased a group of radio stations in Lafayette, Indiana in Q2.
The company is building a community by fostering connections through initiatives like the one where listeners share their struggles with a radio personality and seek support. With an emphasis on hyper-local coverage and community involvement, this company can expect exponential growth. As its expenses are also stabilizing, there’s room for future growth, making this a top broadcasting stock to buy.
The stock is held by 5 hedge funds, and Minerva Advisors has the largest stake with a value of $3,617,397, as of June 30.
Merion Road Capital stated the following regarding Saga Communications, Inc. (NASDAQ:SGA) in its fourth quarter 2023 investor letter:
“Like the broader small-capitalization market, most (all) of our returns came in December. Unlike the index, however, this was driven by a few catalysts that positively impacted our portfolio. Entering December our second largest position was in an oil and gas company, Unit Corp (“UNTC”). UNTC declared a special and common dividend equal to 40% of its then market capitalization. Similar to UNTC, our position in the small radio broadcaster, Saga Communications, Inc. (NASDAQ:SGA), benefitted from a special dividend equal to 10% of its then market capitalization.”
Overall SGA ranks 9th on our list of the best broadcasting stocks to buy. While we acknowledge the potential of SGA 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 SGA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.