People are returning to the movies. After most theaters were closed during the pandemic, they are now largely reopened and showing a number of highly anticipated films that are bringing audiences back to the cinema for the first time in more than 18 months. Yet how we consume movies, as well as television shows, has changed as a result of the pandemic. This has made determining the best movie stocks to buy more a tricky task than before.
Streaming content from home ascended during the Covid-19 crisis and is here to stay. As a result, many movie studios are opting for so called “hybrid” release models, where films simultaneously open in movie theaters and are available to stream from the comfort of home. This approach, say industry analysts, represents the evolution of cinema.
While movie theater exhibitors balk at the approach, there appears to be no going back to the way movies were released prior to the pandemic. As the post-pandemic cinematic evolution plays out, we look at three of the best movie stocks for investors to own today.
Best Movie Stocks to Buy: Netflix (NFLX)
Investors shouldn’t bet against Netflix. Especially with Squid Game currently streaming. The show about indebted contestants who compete in a deadly game in hopes of winning a large cash prize is the latest global hit from Netflix that is drawing in viewers and led to new subscriptions.
In its latest quarterly financial report, Netflix handily beat the expectations of Wall Street analysts, announcing that it added 4.4 million new subscribers in this year’s third quarter, which was much better than the 3.84 million new subscriptions that had been expected. The company’s revenue came in at $7.48 billion, exactly as forecast, while earnings-per-share (EPS) was $3.19 versus $2.56 that The Street had been calling for.
The solid third-quarter results were the latest example of how Netflix continues to dominate the increasingly crowded television and movie streaming sector. With a focus on creating content that appeals to a global audience, signing exclusive deals with movie stars and film directors, and a stable of hit programs ranging from Orange Is The New Black and The Crown to Squid Game and Midnight Mass, Netflix continues to lead the way in streaming.
The company is also racking up its fair share of award nominations for both TV (Emmys) and movies (Oscars), proving that it is a leader when it comes to premium content. All the success has helped propel NFLX stock 27% higher this year to its current price of $665.68. The stock has gained 12% in the last month since its latest financial results were made public.
Amazon (AMZN)
Amazon is still mostly known for fulfilling and shipping online retail orders. However, the Seattle-based company is quickly becoming a powerhouse in the world of movies and television. The company has just finished its $8 billion acquisition of film studio MGM, which gives it a number of popular movie properties that includes the James Bond, Rocky and Pink Panther series, as well as television shows that include The Handmaid’s Tale, The Voice and Shark Tank, among many others.
This is in addition to Amazon’s Prime streaming service that is home to many popular movies and a growing number of original documentaries and television shows, including Yellowstone, Little Fires Everywhere and Hunters.
The company is spending heavily to secure must-see programs and original content for its Prime streaming service. Amazon recently acquired the exclusive rights to broadcast Thursday Night Football games beginning with the 2022 season, and, through its own studio, is producing a Lord of the Rings TV series that, according to media reports, it is spending $450 million to develop.
Clearly, Amazon has ambitions to become a major player in Hollywood. All the moves the company has been making in entertainment have failed to move the needle on the company’s share price. Year-to-date, AMZN stock is up only 5% at $3,376.07 a share. Over the last six months, the stock price has declined 1%. Shareholders should take heart though. It likely won’t be long before Amazon’s next move higher.
Best Movie Stocks to Buy: AMC Entertainment (AMC)
Yes, it’s a meme stock. And yes, it has been on a rollercoaster this year. But WallStreetBets aside, AMC Entertainment is still the largest movie theater chain in the world with more than 10,000 screens across the globe. And if any company is going to benefit from people returning to cinemas, it is AMC Entertainment.
The company recently reported that box office receipts are close to returning to pre-pandemic levels, noting that the $109 million in weekend box office tallies in mid-October was only 16% behind the same October weekend in 2019, before Covid-19.
And people are now returning to movie theaters in droves, enticed by big tentpole films such as Venom: Let There Be Carnage, No Time To Die (the latest entry in the James Bond franchise) and Dune. More highly anticipated films are being released for the upcoming holiday season. AMC Entertainment is capitalizing on the return of patrons, improving its snack offerings and pushing mobile ordering using its app. The company has reported that food and beverage revenue per customer at its U.S.-based theaters is up an impressive 42% over the past two years, a period that mostly occurred during the pandemic.
While it’s tricky to evaluate AMC stock given its dramatic swings this year, what can be said is that the share price has consistently traded around $35 since mid-August when the current slate of new movies began to be released by Hollywood studios.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
