Nexstar Media Group is the largest television owner of television stations in the US. It owns 197 television stations across multiple areas of the US. Nexstar Media is considered to be one of the best media stocks to buy in 2020. Nexstar earns revenues through advertising and retransmission. Digital media is also another source of revenue for the company. While the broadcasting industry has been negatively impacted by low ad spends, the upcoming presidential elections are changing the outlook.
Political ad spending hits a record
A total of $6.7 billion has been sent on political ads this election season. This number is expected to go up even further as there are still a couple of weeks left. Investors looking to cash in on this trend may want to look at the top communication stocks to buy. Interestingly, political advertising tends to follow a regional strategy. It means that a significant portion of such ad spending goes to local cable, broadcasting, and TV stations. This year, $4.1 billion went to local broadcast stations, $1 billion to local cable, and only $247 million to national networks. The Senate race spending has also gone up from $989 million to $1.67 billion.
Top Communication Stocks to Buy As a Result of This Ad Spend
Investors can consider stocks like Sinclair Broadcast Group, Gray Television, Tegna, and Nexstar Media Group. These companies are well-placed to benefit from the ongoing political ad spending. Nexstar looks like the best pick because it has gained 90% since the March market crash. Nexstar also currently trades at a 2.5% dividend yield, which is not bad given the near-zero interest rates in many developed economies. Nexstar seems to have done alright on a longer-term basis too. It has gained 66% on a 5-year basis. The stock closed at $88.03 on the 16th of October, 2020. Over the past month, the price has dropped by almost 7.5%.