Hemisphere Media Group is a Niche Cable TV Opportunity

In case you missed it, the Iowa caucuses declared Hillary the winner for the Democrats and Ted Cruz upset The Donald on the GOP side. Hillary is pretty much a foregone conclusion for the Democrats, but the GOP race is much more interesting. If our two cents matter, we believe Marco Rubio is the guy for the Republicans, and in our opinion, the only candidate who can beat Clinton. He is young, popular, from the crucial state of Florida and has the chance to swing some of the Hispanic vote back to the GOP, where they were clobbered in 2008 and 2012. There can be no denying this demographic is growing exponentially and will be critical in politics and business far into the future.

Below is the one-year chart for Hemisphere Media Group (NASDAQ – HMTV - $14.18).

It is fairly obvious the stock has had an overall great trend over that time despite some setbacks recently that coincide with the overall market sell off over the past few months.

HMTV 1-Year Chart

(Source: www.otcmarkets.com)

Hemisphere Media Group owns and operates cable and television broadcasting networks in the United States. It operates Cinelatino, a Spanish-language cable movie network with approximately 15 million subscribers in the United States, Latin America, and Canada; and broadcast television network, as well as produces television content under the WAPA name. The Company also distributes WAPA2 Deportes, a sports television network in Puerto Rico; and operates WAPA.TV, a broadband news and entertainment Website. In addition, the company operates WAPA America, a cable television network that serves 5 million subscribers in the United States; and Pasiones, a cable television network that offers telenovelas and serialized dramas to 4.2 million subscribers in the United States, and 8.9 million subscribers in Latin America. Further, it operates Centroamerica TV, a cable television network that offers news and entertainment, and soccer programming to 3.7 million subscribers in Central America; and Television Dominicana, a cable television network that provides news and entertainment, and professional winter baseball leagues to approximately 2.6 million subscribers in the Dominican Republic.

We will start off with the technical side. Even in a market where most technical signals are bearish, the intermediate and long term EMA are very bullish for HMTV. Revenue for 2016 over 2015 is forecast to grow by 12%, but even more astoundingly, EPS growth is forecast to go from $0.31 per share in 2015 to $0.47 in 2016, that’s over 50%! Profit margin of 10.4% is impressive and an awesome operating margin of 27.8% should help ensure revenue will translate to the EPS performance that is expected this year. Finally, the Company had $170 million cash on hand at end of 3Q15.

Hemisphere offers great exposure to an expanding media market in the growing Hispanic demographic. Look for a 25% pop over the next six months for HMTV.

Have a great day!

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