Companies With Upside Catalysts Can Still Offer Great Returns Here

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The stock market remains near all-time highs. After a big run higher over the past two years, many companies are looking overbought and ready to take a breather. Investors looking for opportunities now need to get more strategic.

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  • One strategy is to look for companies with upside catalysts. That could include a potentially hot new product, a successful turnaround strategy, or even finding a way to unlock value by spinning off a business line.

    Cable and media giant Comcast (CMCSA) is looking to do just that, shedding its cable business. At one time the company’s core business, Comcast now also owns media properties and theme parks, which have held up better as customers have cut back on cable.

    Media has been a tough sector to invest in over the past year, and Comcast shares have traded flat. Revenues dopped 3% and earnings are down 8%. Shedding the high-cost, low-margin cable business could help accelerate Comcast’s growth.

    Action to take: Investors may like shares here, as the sale of the cable division could provide an upside catalyst. At current prices, Comcast also pays a 2.9% dividend.

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  • For traders, shares are already trending higher from a summer low in June. That trend is likely to continue, especially if Comcast can unlock value by selling off its cable business.

    The January 2025 $47.50 calls, last trading for about $0.70, could see high double-digit returns or better over the coming months.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

  • Special: Every Time the Government Releases Jobs Data... Make This Trade the Night Before!