Stock Talk - Michael Corty, Morningstar

All right -- has a market performing right now. It's still it's not quite a party in any direction we get the Dow down four S&P up two NASDAQ down five oil flat at 9107. -- up slightly there in and the two -- US treasury one point 745 not much movement since we opened at nine authority and angles next up. Nine dollars thirty cents to fifty and 66. All right they would. Got a couple stock picks for you Michael 40 from morning star joins us. First stock on the list is a 35 dollar stock with a 3% dividend Michael welcome to the show are you doing. And they were talking about Time Warner here TWX. What is that you like about Time Warner -- Well first thing is that it was -- stopped in undervalued I think it was 45 so. Treating it that it decent discount so what I think it's worked. Tenet story here is that you know video content is -- That's kind of been our our -- for quite some time in and frankly Time Warner. Owns a lot of very valuable TV contents. Obviously HBO's what some people familiar list that's a great brands. As. Solid growth prospects both here in the US and overseas. -- so it's kind of overlooked with Time Warner is they -- a lot of TV content that comes from their studio that actually gets. Put on all the -- and broadcast networks to see. CBS NB CBC as well all the cable networks and kind of our view. Is that old mean all the rights that original content. -- even more value. Today's world where you know there's Netflix and there's other people offering to. Have actually -- you're still contents. Like at a later date so I think. With Time Warner treated. You know between 1011 I. Earnings and with a 3% dividend yield. I think it's that -- no brainer at this press. Do they produce their own content treated do they -- it out I'm thinking about things like we've got that. Game of Rome's content -- -- series Rome The Sopranos out. Own mail all that content within that with a -- HBO -- what they've done. You know. That's that's some guy able stuff I mean that that is yeah -- you're talking about some of the best. Content that's on TV. Yet -- bakery in in in perspective is you know if you look at -- PO domestically. It's it's an expensive service because of pain for basic cable on an opinion on top that and currently they have about twenty million substance and what's going on there is they have -- in power so. The growth. On the still side comes from. -- do -- gradually increases that it kind of passed through distributors which. Eventually get passed on to consumers so we've been through the bad recession in the last you know 23 years and the fact they've held on them that many. Any subscribers. I think that. They -- sustain power of these pilgrim. -- and you said you thought it could be a 45 dollar stock releases yeah it's worth right now. Yeah no I think you know obviously. It could take some time to get their but in the long run I don't think -- a lot. Good things happen it cheap stock -- -- And you're getting paid to wait. You're here get paid 3% just to sit on the silence rates. Her yet the management. -- I think very highly. Dispute he was former head of HBO -- -- a continent and parts. And obviously they have a very checkered history. You know but that's lung capacity. In a lock position that things but at this point. They're really focusing on content and they're buying shares back and paid dividends so -- I think I'm more a very good story. Very good RED another one forest this has a five letter symbol to a DIS. Seek a discovery communications this is a 46 dollar stock and I gotta tell you never heard of. Okay well quote -- it give you this story real quick here yet discovery is it in the cable network and so. Their whole businesses you know they have. The US cable networks they own and and they have a strong presence overseas. In the US to mean brands would be the Discovery Channel that deflection if they also own PLC an Animal Planet. That oversees what they've. What they're able to do was translate a lot of those those brands and channels that they've been added for twenty years on the international side so. Interesting thing with this stock. It's it's a little more expensive because there's a little more growth here you know. Why no dividend -- are making good money to make it to sixty share why are they given some of that back to the shareholders. He they're that it -- question. The ownership they're going John Malone is kind of legendary figure in the media and in content business. That he still has. A lot of stayed in terms of capital allocation and you know influence on the board of directors and he's generally preferred as they share repurchases so that. That's kind of what they're where they're going to capital allocation. I agree and I think there's more growth here but I -- -- there's there is room corporate dividends that if you're looking to get in the stock that would. Count on net dividend any -- soon. -- and at 46 bucks eating it's got any growth left -- editors in -- about it. I think it's been as low as 31 dollars a share during the last year. Yeah I think it's -- state besides so. You know obviously you know. That the stock mean we were really the like last August September -- these stock suppose that macros -- years. Is. You know discovery especially there's they're dependent on advertising and so that's held up remarkably well. So any time there's a downturn in the market very -- being. There's concern that advertising Brooke -- so now -- on the stock trade off and I. Think that's a -- -- that's when it if the stock. At a better price something -- them like discovery at I like it 47 debate is. A lot more excited to -- of forty dollars. We think do you still like Interpublic Group that I PG that's a dollar stock. And it and it also has a dividend. Yes the story there is you know the ad agencies and consolidated business. There's you know three main holding companies maybe sports. -- -- -- -- be Coke publicists but essentially the story here is that. Kugel evolves based -- all these other entity is that. There's a general mystery that misconception at all advertise in all it's gonna go offline and that they're gonna this in mediate these ad agencies but these -- agent. Easily in -- public. They have an important relationship -- corporate customers. And it. In its Europe Procter gamble or Johnson Johnson even these big companies you have -- -- -- apartment but he needed expert because all the different advertising in. In part in options that are out there and he. You need to have a balanced strategy and beat Eddie. He's played a key role. So. I generally think it. You know these companies have a lot of steam power. Industry has consolidated so there is competition you see companies. Leaving one added agency and having a different -- -- but I kind of look at that is kind of shuffling the chairs. With these -- be holding holding company. In a switch in compliance of movement around but I just think that the solid business. Look a lot of global growth a lot of his competitor. Doing more international business -- acquisitions and other markets and obviously. The US markets mature. And so there's opportunities to grow internationally acting in a public. You know attributed. You know -- if -- rejecting it's worth thirteen. You and it's it's it's a cheap -- it's just under appreciated by the market. Right now all right well thank you very much for your time we sure appreciate it Michael great now. As Michael party from Morningstar history stock picks for Time Warner symbol TWX. Discovery communications DIS. CK. And interpublic group I PG loses three stock picks for today.