Technicalspeculator Trade-of-the-Week: Discovery Inc. (DISCA)

By Tech_Spec
17-September-2018 9:00:14 PM
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This week’s Technicalspeculator.com Trade-of-the-Week is part of the consumer cyclicals section, sub-section entertainment of NASDAQ.  The recent run-up in the share price of DISCA is from inking a deal with HULU.  This deal allow the company to bring much of its content to a streaming service.

Company Profile: Discovery, Inc. operates as a media company worldwide. The company operates through U.S. Networks, International Networks, and Education and Other segments. It owns and operates various television networks under the Discovery Channel, TLC, Animal Planet, Investigation Discovery, Science Channel, Velocity, Discovery Family Channel, Destination America, American Heroes Channel, Discovery Life, The Oprah Winfrey Network, Eurosport, Discovery Kids, DMAX, and Discovery Home & Health brands, as well as other regional television networks. The company’s content spans genres, including survival, exploration, sports, lifestyle, general entertainment, heroes, adventure, crime and investigation, health, and kids. It also develops and sells curriculum-based education products and services, such as an online suite of curriculum-based video on demand (VOD) tools, professional development services, and digital textbooks, as well as student assessments; and publishes hard copy curriculum-based content for K-12 schools.

Fundamentals:

Trailing P/E: N/A, Forward P/E: 9.52, EPS: -1.26

PEG: 0.82, P/S: 2.43, P/B: 2.59

Profit Margin: -8.28%, Operating Margin: 25.20%

ROA: 5.50%, ROE: -8.44%, Qrtly Earnings Growth: -42.20%, Current Ratio: 1.45

Additional Fundamental Data: https://finance.yahoo.com/quote/DISCA/key-statistics?p=DISCA

Technicals:

Recently broke out of a massive 29-month consolidation

New 52-week high, Buying momentum (RSI) is positive and near overbought

1st support level is at $30.00, The safety stop is at $29.60

The target is $37.50

Suggested buying approach:  The upside was driven by a partnership deal.  The deal between Discovery and Hulu will have the company bringing much of its content to the streaming service.  This includes almost 4,000 episodes of some of the channels best shows.

Technically, buy a half position of DISCA now.  If the stock pulls back, as long as the price is above the safety stop level, wait for confirmation of support and then add to the position.  Always use a 3% trailing stop.

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Author: Tech_Spec

Canada’s only Master of Financial Technical Analysis (MFTA). This 4 – 5 year program offered by the International Federation of Technical Analysts (IFTA) in England is regarded as the global standard. • Instructor of Technical Analysis for the Canadian Securities Institute (CSI). My role is teaching market analysis to industry professionals. • Financial Technical Analyst offering 25 years experience in the financial and investment service industry. • Editor and owner of the Technicalspeculator.com, an on-line independent financial market research and newsletter website. • Registered Securities Advisor

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