The U.S. consumer is doing well. And as consumers continue to flex their muscles, it’s a good time to take advantage by getting involved in sectors that are consumer focused.
Remember this quarter last year, things weren’t quite as bullish. The Federal Reserve was raising rates as inflation was rising. The economy looked strong, but predictions for 2019 were dour, given the powerful surge when the December 2017 tax cuts took hold in 2018. And rising rates didn’t help.
But the Fed reversed its path in January and began to ease in 2019, also adding a new version of quantitative easing. Then the teetering economy righted itself, and while things don’t look fantastic, they at least look good.
Now the consumer is strong, rates are low and a recession continues to be beyond the horizon. So it’s time to look at the best stocks the market has to offer — and many of them are entertainment stocks. So, as we arrive in the holiday season, I thought it might be a good idea to explore the seven entertainment stocks to help you get away, whether before, during or after the big holiday events.
Entertainment Stocks to Buy: Sparklight (CABO)
Sparklight (NYSE:CABO) formally changed its name from Cable One this year, although that update hasn’t been reflected in the ticker yet. But when the ticker changes, bear this in mind.
The company was originally known as the Post-Newseek Cable, but was renamed in 1997. Graham Holdings (NYSE:GHS) spun off the subsidiary in 2014. Now it provides services to 21 states and nearly 1 million homes and businesses. GHS is the same parent company that sold The Washington Post to Jeff Bezos in 2013.
It’s easy to see why a major name would see a cable company as a great resource for a growing empire. I’m sure when it began, the possibilities were focused on television. But now, those copper wires can carry everything.
And remember, there are plenty of places in rural America where fiber optic cable is too expensive to lay and there are functional monopolies in these less dense markets.
Rising demand for services is helping boost this stock, especially over the next few years. CABO stock is up 79% in the past 12 months, and that trend should remain in place for a while.
Churchill Downs (NASDAQ:CHDN) is more than just the place that everyone looks forward to on the first Saturday in May.
The Kentucky Derby is certainly its main national event, but CHDN is far more than just that racetrack. It owns several other racetracks across the United States. It also owns a growing portfolio of casinos and resort hotels. And it has a vibrant off-track betting and gambling subsidiary as well.
The point is, whether you head to Kentucky or not, CHDN is ready to welcome you, especially if you’re looking to drop a few dollars on the ponies.
Horse racing is about a $4 billion industry, but in recent years, casinos have taken some of that market share. CHDN has adapted by moving into the casino space as well. And it’s paying off.
The stock is up almost 50% this year, yet its trailing price-to-earnings ratio is only 37. That means after a strong rally it still has some headroom. The combination of momentum and a strong niche business model, both crucial to my Growth Investor strategy, is certainly compelling. And as the consumer spends, this will only grow.
Melco Resorts & Entertainment
Melco Resorts & Entertainment (NASDAQ:MLCO) is one of the top casino resort developers in Asia. And it represents the higher end of that demographic. For example, it has the most Michelin-starred restaurants on its properties than any other resort brand.
Its properties include City of Dreams, Altira, Studio City and Mocha. Most of these properties are in Macau, off the Chinese coast. Studio City also operates in Manila Bay, Philippines.
Its Studio City brand also works with U.S. entertainment firms to create in-resort entertainment. For example, in Macau, Studio City works with Warner Brothers to offer fun zones, rides and even recording and broadcast studios.
With the U.S.-China trade war still in effect, gaming in Macau is a much better bet than heading to the U.S., especially for big Chinese gamblers.
The stock is up 28% in the past year and delivers a solid 3% dividend.
Discovery (NASDAQ:DISCB) is a content provider. Its TV channels include The Animal Planet, Discovery Channel, Investigation Discovery and Science. It provides this material to content distributors like cable and streaming companies.
It also has divisions that focus on international distribution and educational, curriculum-based content.
The fact is, content is king. And in this case, this fact means that owning channels with unique and compelling content is king. Remember, it was DISCB that started Shark Week, which went from a corny event for regular fans to a national event that draws in viewers from around the world.
Over the years the company has found its niche and remains a valued partner by the companies that provide its channels for a fee. And as streaming entertainment rises, so do the fortunes for Discovery.
Comcast (NASDAQ:CMCSA) is the nation’s largest cable and broadband provider. But it’s so much more.
It runs the Xfinity brand of cable and broadband services. It owns the Universal brand amusement parks in Florida and California. It also owns NBC and all its affiliates (CNBC, MSNBC, etc), as well as the channels Telemundo, USA Network, Syfy and E! to name just a few.
The fact is, if you think that home entertainment is a growth industry, then this is the blue-chip stock to own to profit from it.
Now, it is massive — it has a market capitalization of $197 billion — so it’s not exactly going to grow like smaller firms. But it will chug along and deliver a solid 1.9% dividend along the way. That’s the mark of a superior stock, and I’ve got more where that came from.
SeaWorld Entertainment (SEAS)
SeaWorld Entertainment (NYSE:SEAS) is a theme park and entertainment company that had a rough go of it a few years back when there was a great deal of controversy put on it regarding its breeding and training programs, especially with its killer whales. And after a public relations disaster, the company finally realized it had to do something.
And when it moved, it did so in a decisive way. That helped save its reputation and its parks.
SEAS also owns Busch Gardens parks as well as Aquatica, Discovery Cove and Sesame Place. The parks are well designed and provide opportunities for family fun, both in the water and out.
The stock has had a good run year-to-date, up 36%, but it’s only up 10% in the past 12 months. Much of that difference has to do with last year’s disastrous December.
As long as the company remains true to its word on its animals’ safety and health moving forward, its blend of theme parks should see growing crowds as consumers look for unique and family accessible entertainment.
Eldorado Resorts (ERI)
Eldorado Resorts (NYSEARCA:ERI) is a Reno, Nevada-based casino and resort company that has 26 casinos in 12 U.S. states.
In March, ERI started to discuss a merger with Caesars Entertainment (NASDAQ:CZR). By June the talk turned to reality and ERI made a stock and cash bid for Caesar’s for $18 billion. The merger is supposed to be complete by early 2020.
And in a move that’s nice to see from acquiring companies, ERI put a handful of properties up for sale to cover some of the costs associated with bringing in the Caesars acquisition. CZR has 50 properties, seven golf courses and has annual revenue around $8.6 billion.
It’s no surprise that ERI stock moved on the news — it’s up 48% year-to-date, and 50% for the year. It’s a little expensive here, but as this space continues to expand, ERI will be a major beneficiary.
But one thing ERI doesn’t offer is dividends. And if you’ve been at this game for awhile, as I have, you know that income is really valuable to “smooth out” your portfolio returns over time.
‘Money Magnets’: The Best Dividend Growth Stocks Around
So — whatever your portfolio size and goals — you’ll also want to look at the group of stocks I’ve nicknamed the Money Magnets.
Not only did these stocks earn an “A” in my Portfolio Grader, thanks to strong buying pressure and great fundamentals …
The stocks also earn an “A” in my Dividend Grader. These stocks are able to pay great yields — and have the strong business model to back it up.
All in all, I’ve got 29 strong dividend growth stocks for you now in Growth Investor — averaging 4% yields — far more than the S&P 500 or even a Treasury bond. These stocks are poised to do well as we continue to see international capital flow to the U.S. markets. Click here to see how I found these stocks, and how you can get great performance out of YOUR portfolio — come what may.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.