Communication Services Sector 2024 Year-End Update

“Therefore know that the Lord your God, He is God, the faithful God who keeps covenant and mercy for a thousand generations with those who love Him and keep His commandments;

Deuteronomy 7:9

The Bible is truly fascinating if I am willing to take the time to read through it and study it. Historical events within the Bible have been recorded over thousands of years with the connection between the Old Testament and New Testament being a key aspect of the Bible’s truth. Deuteronomy speaks to God’s covenant over a thousand generations which to us goes well beyond human history. This covenant was established between God and Abraham in the Old Testament and renewed by Jesus Christ through His life, death, and resurrection. Jesus spoke many truths from the Old Testament, namely, to love God with all my heart, mind, and soul, and to love others as myself.

Time is an equally important aspect for investing. And like the Bible with the Ten Commandments and hundreds of laws and ordinances, investing can quickly become convoluted and overly systematic. Just as Jesus and God have always emphasized the need to love God and to love others rather than to live a selfish life driven by burdensome standards, investing can be simplified to the fundamentals of what drives a company’s growth and valuation.

Overview

Individual stocks are organized into sectors, and I’ve categorized them as follows:

• Basic Materials

• Communication Services

• Consumer Cyclical

• Consumer Defensive

• Financial Services

• Healthcare

• Industrials

• Real Estate

• Technology

Currently these sectors reflect nearly 370 companies including many of the top companies and growth-oriented peers. Each company has a built financial model projecting fundamental and investment performance over the next five-year period. As each quarter’s earnings reports come to an end, I update each sector accordingly. Retail investors can receive action updates and other information on an individual company basis by subscribing to the Portfolio Moves & Stock Market Analysis plan.

Communication Services Sector

This sector currently includes 25 companies that are covered on a regular basis.

Enterprise Value can be organized as follows:

• Mega Cap: GOOG, META, NFLX, CMCSA, DIS

• Large Cap: WBD, RBLX, TTD, RDDT, PINS, PARA, SNAP, TWLO, MTCH

• Mid Cap: U, ROKU, DJT, PLTK, IAC, RUM

• Small Cap: GENI, CRTO, FVRR

• Micro Cap: KIND, MSGM

Since 2021, only 16 percent of these companies have witnessed a positive stock price return. Only META and NFLX have averaged an annualized double-digit return during this time at 22 and 15 percent respectively.

For 2025, only 24 percent of these companies have witnessed a positive investment return. This has been led by PINS and PARA double-digit returns at 15 and 10 percent respectively.

Looking at the next two years, the average OCF/Share multiples (excluding those companies with negative results) stands at 18.2 times. The highest valued companies include RDDT, NFLX, TTD, and RBLX. Despite trading at a premium, only NFLX is overvalued to a severe degree.

With recent volatility during 2025, performance over the past few years has been lackluster for many of these companies within the Communication Services sector. The goods news today is that this has presented better risk/reward profiles for the mid-term investment opportunities for retail investors.

Based upon financial models for each company, the following recommendations are included:

• Buy: SNAP, TTD, META, GENI, GOOG

• Accumulate: PINS, DIS, ROKU, CMCSA, FVRR, RDDT

• Hold: PLTK, PARA, U, TWLO, CRTO, MTCH, DJT, RBLX, KIND

• Sell: WBD, IAC

• Avoid: MSGM

• Conviction Sell: NFLX, RUM

While some of these companies offer solid initiation and accumulation opportunities, none of them merit aggressive growth consideration, as I define aggressive growth opportunities as those that can potentially generate an annualized return over the mid-term by greater than 30 percent.

Disclosure: The Investor Cornerstone+ portfolio does not own any of the companies mentioned, nor is there any desire or intent to take any action to buy these stocks directly, to purchase calls, or to purchase puts for the foreseeable future.