When thinking about retirement, many investors choose to focus on potential long-term shifts in an industry’s structure.
For instance, this could be a new entrant to the industry, a new product, or some new technology that alters the status quo in favour of one or more companies.
Indeed, it could be argued that there has been something of a structural shift in the subscription TV market, with BT (LSE: BT-A) (NYSE: BT.US) ‘parking its tanks on the lawn’ of BSkyB in the last year as so, as it has successfully bid for Champions League Football as well as making inroads into Premier League football and other sports, such as Moto GP.
Therefore, looking at the long term, BT could be in a position to reduce BSkyB’s dominance of the highly lucrative subscription TV market, or even dominate that space itself.
Of course, BT had a fantastic 2013, during which time its shares gained around 63%. Over the last year it has delivered capital gains of 44%, while the FTSE 100 is up just 2%. Clearly, the market has welcomed the decision by BT to take on BSkyB’s stranglehold on sports rights.
However, BT remains a stock with considerable upside — particularly if it can show the market that its foray into sports rights is working in the form of more customers. The early signs in terms of increased customer numbers were promising and showed that BT was slowly starting to make the investment in sport payoff, although due to the high cost it may turn out to be something of a loss leader for the company.
Trading on a forward price-to-earnings (P/E) ratio of 13.3 hardly makes BT seem expensive when the FTSE 100 is trading on a P/E of 13.6. So, it is difficult to say that shares look particularly expensive at the moment.
Indeed, it could be argued that they are cheap, since BT has above-average growth prospects and could be a major beneficiary from the structural shift in the subscriprion TV market. Although it may take some time for the investment to come good, BT looks to be well-placed to be a major force in future. Trading on a P/E slightly below that of the wider, it could be one for your retirement portfolio.
> Peter does not own shares in BT. The Motley Fool has recommended shares in BSkyB.